Sharon Keogan (Independent) | Oireachtas source

I congratulate the Minister of State on her elevation to office.

In 2019, the Houses of the Oireachtas passed the usual Finance Act, allowing for regulations of taxation, stamp duties and duties relating to excise. Included in the Bill was section 6, on benefit-in-kind emissions-based calculations, which gave effect to a measure included in that year's budget relating to benefit-in-kind tax on employers providing vehicles. The effect of the measure is as follows. From 1 January 2023, a new charging regime for employer-provided cars will take effect, and will be based on kilometres travelled with the CO2 emissions levels of the car. Also, the rate of benefit-in-kind tax on employer-provided vans will increase from 5% to 8% of the original market value of the van from 1 January 2023.

With a commencement date of four years off, I am sure it seemed a long way down the road, but here we are now and the tax hike signed into law prior to Covid is hitting people all over the country during a period of general global inflation and the Irish cost-of-living crisis. Average employees will see a reduction in their pay packet of approximately €300 per month, according to the chief executive of the Kildare Chamber of Commerce. One company driver, Ivan O'Sullivan, a medical representative who covers Northern Ireland and parts of Dublin and Leinster, drives hundreds of kilometres every day. He told RTÉ that his benefit-in-kind has trebled. "It is a huge hit for me financially. It is hundreds of euros a month, thousands a year", he said. Indeed, for many people who use a company car in lieu of a private vehicle, this four-year-old tax hike will all but wipe out any advantages received in this year's budget.

We have about 150,000 company cars in this country and many of these workers have no choice but to drive them. They have been penalised for not having a private automobile - a state of affairs which any critical-thinking climate advocate would realise is absurd. Of course, the reverse logic when it comes to CO2 reductions does not end there. The formula used to calculate the tax, based on kilometres travelled, results in the benefit-in-kind charge on a work vehicle actually dropping at higher mileage due to the thinking that the greater the distance travelled for business, the more the car benefits the company rather than its employee.

The Vehicle Leasing Association of Ireland has warned that it may be contrary to the climate action plan by making businesses move away from company cars to look at adopting an allowance method whereby employees could drive their own high-polluting second-hand cars rather than avail of the company's comparatively new more energy-efficient models. Vehicle leasing companies are reporting that some workers are seeking to hand back their company cars or buy them out so that they can use them as private cars and claim mileage instead.While many companies will transition to an electric fleet over time, at the moment, there is a shortage of electric and hybrid vehicles due to supply chain difficulties and electric vehicle, EV, battery technology. The charging infrastructure is not sufficiently advanced to make such vehicles a viable alternative for many workers. It is an absolute disaster between extra fuel costs and all the other costs that are part of everyday life. It is a real blow for anybody who has a company car.

What is the plan? Are we keeping this reverse logic tax hike, which was put in place four years ago when we had no idea of the state we were going to be in? Are we at least going to introduce some measure to cushion the blow for those users of company cars?