Joe Neville (Kildare North, Fine Gael)
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232. To ask the Minister for Finance if his Department plans to phase out vehicle registration tax; and if he will make a statement on the matter. [68679/25]

Joe Neville (Kildare North, Fine Gael)
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233. To ask the Minister for Finance the financial benefits the vehicle registration tax gives to the economy; and if he will make a statement on the matter. [68680/25]

Simon Harris (Wicklow, Fine Gael)
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I propose to take Questions Nos. 232 and 233 together.

The Finance Act 1992, as amended, sets out the rules governing vehicle registration and Vehicle Registration Tax (VRT). In general, the legislation obliges an individual who brings a vehicle into the State to register it within 30 days, and VRT is charged at the point of registration. The way in which the tax is calculated depends on the category of vehicle involved.

VRT on category A vehicles (generally passenger cars) is assessed based on the value of the vehicle and its emissions levels for carbon dioxide (CO2) and nitrogen oxide (NOx). The CO2 component of the VRT charge is a percentage of the vehicle’s Open Market Selling Price (OMSP), ranging from 7% for a vehicle with zero CO2 emissions, up to 41% of the OMSP for vehicles with the highest emission levels. The NOx component of VRT is calculated using a progressive scale, starting from €5 up to €25 per mg/km of the vehicle’s NOx emissions level. As a result, the total VRT charge increases according to the emissions output of the vehicle involved and its market value. The vast majority of VRT receipts are raised from the registration of private passenger cars.

Finance Act 2024 introduced an emissions-based VRT structure for category B vehicles (generally light commercial vehicles) which has applied since 1 July 2025. For vehicles with CO2 emissions of more than 120g/km, VRT is calculated at 13.3% of the OMSP of the vehicle. For category B vehicles with emissions of 0g/km up to and including 120g/km, a reduced rate of 8% of the OMSP applies.

Heavier commercial vehicles, including lorries and buses, come within category C and are charged to VRT at a flat rate of €200.

The VRT system has seen several changes applied over the past number of years, with the aim of strengthening the environmental rationale of the tax in line with Programme for Government and Climate Action Plan commitments. These changes have had a positive impact on the emissions profile of vehicles registering in the State, with significant emissions reductions evident across all bands in recent years. The average emissions figure for newly registered cars (new and used) in 2020 was 135.6g CO2/km (VRT Band 14) and this figure has fallen year on year. Based on 2024 registrations the average emissions figure is currently 107g CO2/km (VRT Band 8).

The large-scale transition to electric vehicles (EVs) is crucial to Ireland meeting its transport emissions reduction targets and the environmental rationale of the VRT system is encouraging behavioural change. EVs currently benefit from a €5,000 VRT relief, subject to a tapering mechanism, which was extended to 31 December 2026 in Budget 2026.

More than half of EU Member States operate vehicle registration taxes. I have no plans to phase out VRT, as alongside its environmental benefits and its role in reducing transport emissions, VRT is an important source of revenue for the Exchequer. VRT receipts in 2024 were €949 million, making up approximately 1% of the overall net tax receipts. Provisional VRT receipts year to date to the end of November 2025 stand at €919.9 million.