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

I thank Deputy Mattie McGrath for tabling the amendment. I should begin by saying that I was a sales representative myself in the early parts of my career, before I entered into public life. Therefore, I have full appreciation of the importance of a car. I spent the first two years of my working life on the road in the United Kingdom selling various products to various retailers. I have a real-life appreciation of this matter. I appreciate how important sales activity is and how important the car is for doing the work.

However, the key point I will return back to is the fact that we have indicated since the Finance Act 2019 that these changes are coming. They have now been flagged for three years that they will happen. While I accept and understand the point that Deputy Doherty made and I appreciate his consistency on the issue, if we defer a change at this point, I am not sure when it will ever happen. We will end up with a situation where the very important change to the final remaining part of our tax code that is applicable to cars does not happen. We changed the motor tax and vehicle registration tax, VRT, and this change in respect of BIK is the final change we need to make to the final tax pillar with regard to the taxation of cars to make it related to the impact it has on our environment. While I gave some thought to whether it should be deferred, if I defer it for another year, my worry and concern is that it will end up not happening at all and a very important change that needs to happen will be lost. By slowly greening the company car fleets and the lease fleets, it offers an important opportunity to try to green the broader car fleet in Ireland as those cars are sold on for private use after they are no longer leased and are made available for commercial use.

On the rationale, as the committee is aware, this was part of section 6 of the Finance Act 2019. From that Finance Bill, it indicated that after 1 January 2023, the amount taxable as BIK would be determined by the car’s original market value, OMV, the annual business kilometres driven, while the new CO2 bands were to determine whether a standard discounted or surcharged rate would then be applied.

We have aimed to do this by reducing the number of mileage bands from five to four, bringing in a preferential rate of BIK ranging from 9% to 22.5% for electric cars and bringing in a new structure of CO2-based discounts and surcharges to incentivise lower-emission vehicles.

I understand the case that is being made about why it should be deferred given the cost of living pressures I know many are facing but this measure has been flagged for three years and in all of the answers I have had to give regarding the operation of the scheme, including for this year, we have made it really clear that this change is going to happen. Given that the typical lease renewal period for commercial vehicles is around three years, I believe a three-year lead time is appropriate. I have no doubt that the reaction to this will be closely monitored in the early part of the year to see what impact it has but my view is that if we move off this change now, the chance of it happening in a year's time is low and it is just one of the changes that is essential for us to make given the change we can see happening in our weather and climate.