Brian Leddin (Limerick City, Green Party)
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113. To ask the Minister for Finance his plans for reviewing motor tax and VRT for ICE and electric vehicles to encourage the uptake of smaller, lighter and more efficient vehicles on our roads; and if he will make a statement on the matter. [11386/23]

Richard O'Donoghue (Limerick County, Independent)
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222. To ask the Minister for Finance his plans for the affordability of electric cars in the years ahead for families and students who depend on the second-hand market for transport. [10766/23]

Michael McGrath (Cork South Central, Fianna Fail)
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I propose to take Questions Nos. 113 and 222 together.

At the outset, the Deputy should note that neither the Government nor the Minister for Finance have a role in dictating the list price of vehicles which are decided by car manufactures or car dealerships.

My colleague, the Minister for Transport, has overall policy responsibility for transport policy including managing the National Vehicle and Driver File (NVDF) which is a database containing details of all 2.5 million registered vehicles and their owners as well as the 2.6 million licensed drivers in the country. The role of the Department of Finance on the other hand is limited to the taxation of vehicles, namely Vehicle Registration Tax (VRT), motor tax, VAT, and benefit-in-kind.

Regarding taxation, VRT is an emissions-based tax and therefore the amount of VRT incurred will vary across different vehicle makes and models. The charge is determined by the Open Market Selling Price of the vehicle. While there were no changes to VRT as part of Budget 2023, recent reform to the rates structure has provided for increased VRT rates for high emission vehicles, while lower emission vehicles continue to incur low rates of VRT. This reflects the environmental rationale of the tax and underpins Government commitments to decarbonise road transport.

It is important to note that VRT is a tax chargeable on the first registration of vehicles in the State and so is not chargeable on second hand cars sourced here.

The motor tax system was also reformed in Budget 2021, in line with Government commitments to reduce emissions from road transport and in the context of transitioning to the new Worldwide Light Test procedure (WTLP) emissions testing regime. In order to do this the existing New European Driving Cycle (NEDC) motor tax table was adjusted to reflect climate action priorities and to ensure a level playing field with the introduction of the new WTLP table.

Government policy with regard to vehicle taxation is to lower the emissions profile of the fleet. Recent reform has been focused on incentivising behavioural change towards low emission vehicles. The overall policy with regard to these taxes is kept under review as part of the Tax Strategy Group and Budgetary cycle.

Ireland is at the beginning of its transition to private electric transport. Within a few years it is anticipated that there will be a viable second hand market that will provide a more affordable pathway to the purchase of an EV. In addition, the motor industry is planning to bring more affordable electric vehicles onto the market. Notwithstanding this, steps are being taken to accelerate the establishment of a second hand EV market in Ireland.

In this regard, the Department of Transport convened the Electric Vehicle Policy Pathway (EVPP) Working Group to produce a roadmap to achieving the 2030 EV target. This Group considered a variety of regulatory, financial, and taxation policies to accelerate EV adoption. The Group has also examined the issue of price parity between EVs and Internal Combustion Engine (ICE) vehicles and has found that parity in respect of the Total Cost of Ownership is likely to be achieved later on this decade, driven by falling battery prices and savings due to economies of scale.

Additional measures to further incentivise EVs and/or disincentivise fossil fuelled vehicles will also be necessary. Cost-effective, targeted policy supports should continue to be developed and strengthened over the coming years. An Implementation Group has been established to progress the recommendations and consider further potential measures and barriers to the adoption of the EVs. It will also examine the creation of a second hand market.

It should also be noted that there are currently a raft of very generous measures to support the uptake of EVs, including; low levels of Vehicle Registration Tax and motor tax, VRT reliefs, preferential BIK treatment, home charger grants, toll reductions and various purchase grants.

In summary, I am satisfied that the Government has provided a broad suite of supports for the uptake of lower emission vehicles. Future taxation policy with regards to vehicles will be kept under review.