Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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351. To ask the Minister for Environment, Community and Local Government if he accepts that road tax should apply on the basis of the cubic capacity of the vehicle and not on age; if he will seek to end the discriminatory practice of applying a more costly road tax charge on vehicles that were first registered pre-2008; if he will ensure that an appropriate amendment will be introduced in budget 2017, or sooner if possible; and if he will make a statement on the matter. [12754/16]

Simon Coveney (Cork South Central, Fine Gael)
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Motor tax on cars registered prior to 2008 is based on engine capacity. To incentivise reductions in emissions of greenhouse gases, cars registered from 2008 onwards are taxed on the basis of CO₂emissions.

In the case of cars taxed on engine capacity, the banding is structured so that the level of tax payable increases as the engine size increases, with bands ranging from €333 to €1,809 per annum. In the case of cars taxed on the basis of CO₂, the banding is structured so that higher emitting cars attract a higher rate of tax than lower emitting ones. The bands range from €120 per annum for zero emitting vehicles (i.e. electric vehicles) to €2,350 for the highest emitting vehicles.

While the highest CO₂band attracts a rate of tax higher than the top engine capacity rate, it is acknowledged that, overall, the average annual tax is lower on CO₂vehicles (€275 v €503). Accordingly, higher percentage increases have been applied to cars taxed on CO₂in recent Budgets with a view to re-balancing the tax base while retaining an environmental incentive to purchase more environmentally friendly vehicles. The percentage increase in motor tax for passenger vehicles taxed on engine capacity was 7.5% in Budgets 2012 and 2013, compared with increases averaging 25.5% in Budget 2012 and 19.8% in Budget 2013 for vehicles taxed on CO₂.

The move to CO₂has been effective in reducing emissions. 95% of all new vehicles purchased are now in the lowest emitting A and B bands, which attract the lowest tax rates. Overall, the average emissions from new cars purchased in Ireland in 2014 was 117g CO₂/km (the most recent figure available), down from 164g CO₂/km in 2007, before the CO₂system was introduced, meaning that the country had reached the EU target of 130g CO₂/km for 2015 well ahead of target. The target for 2021 is 95g CO₂/km. Accordingly, I do not currently intend to remove the environmental incentive and revert to the older basis of taxation on the basis of engine capacity. Any amendments to rates are for consideration in a budgetary context. All of these matters are kept under on-going review.