Oireachtas Joint and Select Committees

Thursday, 23 September 2021

Committee on Budgetary Oversight

Pre-Budget 2022 Scrutiny (Resumed): Minister for Finance

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

I thank the Deputy for the points he has made. He acknowledged, but I wish to develop a little more, the really big changes we made in respect of motor taxation last year, that is, the change in motor tax and the very significant decision we made with the introduction of the worldwide harmonised light vehicle test procedure, WLTP, using which we correlated the tax paid on a car with the impact it has on the environment. The Deputy may be aware that we are already seeing clear signals that the changes we made last year are having a contributory effect in the change in purchasing patterns for new vehicles. What we have seen up to this point in the year is already a clear shift in purchase trends toward lower emissions vehicles. To give an example, in 2020 the average WLTP figure was 135.6 g of CO2 per kilometre. It now stands at 122.6 g. That is a real sign of change. I will not say for a moment that the changes we made in the Finance Act last year are the sole reason for that, but they are part of the reason. So far this year, we have seen up to the end of July a 33% increase in the purchase of electric vehicles and hybrids. To put that in context, the figure for 2020 was 20%, while in 2019 it was 13%. The rate of increase is accelerating before we make any change at all.

In the budget last year we changed the taxation of hybrids, recognising that due to the fossil fuel component of some engines the environmental or climate impact of some hybrids is not as positive as may have previously been understood. We changed some of our tax policy to capture and reflect that.

As regards further changes, as the Deputy stated, having already brought in a sweeping set of changes, I would normally be careful not to follow that with another set of changes only a year later, but I am aware of the importance of the points the Deputy is making. I am aware of the existential nature of the climate crisis that we are, for now, trying to mitigate and I will certainly consider the points the Deputy is making. I ask him to be aware that this is in the aftermath of big changes already made that appear to be having a role in changing purchase patterns. Further changes have to be considered in light of what we have just done and in the context of a car market and car purchases that have had an incredibly volatile 18 months. We will certainly consider the point the Deputy has made but I ask him to be aware of those matters.

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