Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I thank the Deputies from the Rural Independent Group for proposing these amendments. I also thank all the Deputies who contributed to the discussion. We had a detailed discussion on this issue on Committee Stage but I welcome the opportunity to go through the issue again and address the thrust of the amendments proposed by the Rural Independent Group. The amendments seek to extend indefinitely the proposed benefit-in-kind, BIK, reduction of €10,000 to the open market value of the vehicle and the adjusted upper mileage band. Currently these proposed changes have an end date of 31 December this year. The Deputies should be aware that the Government remains committed to the environmental rationale behind the current emissions-based vehicle BIK regime which has been in operation since 1 January. This change was legislated for in the Finance Act 2019. It purposely provided for three years before becoming operational in order to provide a signal in advance to industry and allow for typical lease renewal periods of approximately three years. Given the current unprecedented inflationary context, however, the Government recognises the difficulties experienced by some people facing BIK increases under the new regime. To that end, the Government has decided to provide temporary changes to BIK for the current year which will help to mitigate some of the increases associated with the new emissions-based calculation for this year. The new subsection, which was inserted on Committee Stage, provides for the application of a universal relief of €10,000 to the open-market value of a vehicle in categories A to D, inclusive, in order to reduce the amount of BIK payable. This will also apply to vans and electric vehicles, EVs, but will not apply to cars in emissions category E, which is the highest emissions category. For EVs, the open market value deduction of €10,000 will be in addition to the existing relief of €35,000 that is currently available for battery EVs, meaning that the total relief for 2023 will be €45,000. Additionally the lower mileage limit in the highest mileage band, which is currently 52,001 km, will be reduced by 4,000 km so that the highest mileage band is now entered into at 48,001 km.

The measures will be backdated to 1 January of this year and will remain in place until the end of the year. I want to acknowledge the role of the Revenue Commissioners and thank them and my own officials for the work involved in constructing the amendment we brought forward on Committee Stage. It is important to note that these changes were made solely in the context of the current cost-of-living inflationary challenges to help to mitigate the financial burden for employees driving company cars at this time. I want to make the point that it is important that we retain the signal to companies that the Government is committed to the environmental rationale behind the current emissions-based vehicle BIK regime. It is important that we reaffirm and stand behind that signal. That said, I understand the point that the rural Deputies in particular have made about extending this indefinitely. That is not a commitment I can give to the House tonight. However, as is always the case when it comes to taxation issues this will be examined again in the lead-up to the budget. This particular Bill gives a commitment until the end of the year. I am reaffirming that we are continuing to stand behind that environmental rationale. We want companies that have not yet made the investment to support the transition to more environmentally vehicles to do so. Companies can claim an accelerated capital allowance of 100% for energy-efficient equipment, including electric and alternative fuel vehicles. This can be claimed in the first year that the asset is used in the business. When this was first introduced in 2019 it should be acknowledged that many businesses made the transition.

Perhaps some could not afford to. Others may not have fully appreciated the impact this change would have on their employees. This is an issue that affects the employees, but they are dependent on the decisions the company makes about the type of vehicle being provided. The carrot is there through the taxation system to incentivise and support companies to make the decision we want them to make. We acknowledge not all of them are in a position to do so, notwithstanding the supports that are there, but that signal is important and one I stand behind.

Issues have been raised around a range of matters associated with this, including EV charging points. As colleagues will know, earlier this year the Government launched the new Electric Vehicle Charging Infrastructure Strategy 2022-2025. It will see €100 million spent on public charging infrastructure between now and the end of 2025. At the moment, we have a situation where the overwhelming majority of charging points, I think about 80%, are at private dwellings. We need more publicly-available infrastructure, including a pool of high-power chargers - every 60 km is what is committed to on our motorway network - as well as home apartment charging, residential neighbourhood charging and so on. That is committed to and the funding is provided now to ensure that can be rolled out.

Deputy Doherty again raised the issue of data. I acknowledge the data we have on the breakdown of benefit in kind tax that is paid is very limited. We have asked the Revenue Commissioners to see what they can provide in advance of the budget to support a proper evaluation of the impact of this and other measures, because I believe in evidence-based decision-making and policy-making. The change we made on Committee Stage is a result of the case that has been made by many thousands of workers. I received the emails like all colleagues in this House. I examined them and teased out with the officials what we could do to protect the principle of supporting the environmental rationale while at the same time giving some temporary relief to workers. I think we have achieved that through the changes we have made and, as I have said, I will keep the matter under review, especially in the lead-up to the budget.

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