Simon Harris (Wicklow, Fine Gael)

I will take amendment Nos. 17 and 18 together. These amendments relate to the temporary reduction applied to the original market value of cars in categories A1 to D, inclusive, and all vans for the purpose of determining the benefit in kind, BIK, payable. The amendments seek to keep the OMV reduction at €10,000 until 31 December 2028, in contrast to what we believe to be the tapering out of the relief provided for in the Bill as it stands.

The Government remains committed to the environmental rationale behind the current emissions-based vehicle BIK regime, which has been in operation since the start of 2023. Temporary changes were made in 2023 in light of the inflationary context at the time. It is now appropriate that these changes are gradually phased out and we are trying to avoid a cliff-edge approach in this regard. As part of this Finance Bill, the OMV deduction is being extended for three further years of assessment on a tapered basis to the end of 2028. The OMV will be reduced by €10,000 for the 2026 year of assessment, reducing thereafter to €5,000 for the 2027 year of assessment and €2,500 for the 2028 year of assessment.

With the temporary changes made to the BIK regime in recent years, there has been a level of uncertainty for employers when it comes to planning long-term fleet investments. A more strategic approach is required to give policy certainty to employers and employees. The tapering out of the temporary universal relief and the introduction of a new BIK rate for zero-emission cars provide greater long-term certainty in this area. The gradual phase-out of the relief will ensure that by 1 January 2029, BIK will revert to the structure as initially legislated for in the Finance Act 2019.

The large-scale transition to electric vehicles is crucial to Ireland meeting its national and EU emissions reduction targets. We often talk about climate action and the importance of transitioning in this House. Continuing to subsidise fossil-fuelled vehicles through the BIK system is incompatible with such ambitious climate action targets. The OMV relief is being extended on a tapered basis in order to provide more time for employers to provide a lower emission car to employees over the next number of years in order to reduce the BIK liability. For the reasons outlined, I do not propose to accept these amendments.

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