Michael McGrath (Cork South Central, Fianna Fail)
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As the Deputy has said, this was legislated for in 2019. It is fair to say that some companies changed their fleet of vehicles and took on board the legislative change that was enacted but had not yet come into effect but not all did so. There have also been difficulties in the supply chain with new vehicles over recent years. When I came into office, I was aware this could be an issue and, to be fair to my predecessor, he flagged this and said that it was something we would have to watch early in the year as individual applications became apparent. Of course, individuals did make known the direct impact it was having on them. I spent some time personally examining individual cases to see how I could learn from them. I worked with my officials and we have devised a sensible temporary solution.

I will outline a few examples of what the impact of the changes we are bringing forward would be. In the case of a category C vehicle, such as a Skoda Octavia, with a value of just over €29,000 and mileage of 43,000 km, the BIK tax liability last year would have been €151.55 per month. Under the new regime, if it was not changed it would become €227.33 per month. As a result of the changes we are bringing about, it is being reduced to €143.33. In that case, there is a very modest reduction relative to what it was last year. That would be the exception rather than the norm. For many people it means less of an increase in BIK. An example of that would be an Audi, a category D car worth €49,000 with a mileage of 42,000 km. Last year, the BIK would have been €255 per month. Under the new regime, it would have increased to over €430 per month. That has now been reduced to about €342. It has been reduced, but it is still an increase, in particular for cars that are less environmentally efficient.

That will give the Deputy a sense of the impact of the changes we are making. We have gone from five mileage categories under the old regime to four under the current regime. We have kept that change but the entry point to the highest mileage band is now 48,000 km. There are some who will benefit from that change. People made the case that they had to drive for longer to get a lower BIK. We considered that in the round and have made changes that are sensible. I will examine it in the months ahead in the lead up to the autumn finance Bill.