Ireland considers weight-based tax for cars and SUVs to support transition to electric vehicles
The Tax Strategy Group in Ireland is proposing a weight-based tax for SUVs and large cars to compensate for the revenue loss from the shift to electric vehicles. The tax experts highlight the need to adapt tax structures as the vehicle fleet electrifies to maintain government revenue. Similar schemes in other EU countries, like France, serve as models for this approach.
A weight-based tax is being considered for SUVs and large cars as a way to offset losses from existing tax bases due to the shift to electric vehicles, according to briefings for the government ahead of the Budget. The Tax Strategy Group, an expert advisory panel at the Department of Finance, suggested that this new levy could help plug the hole created by the changing vehicle fleet and electrification of the Irish transport network.
The group highlighted that the average weight of passenger vehicles in Ireland has increased by approximately 28% between 2001 and 2022, raising concerns about greater energy and resource consumption, traffic congestion, road infrastructure degradation, air pollution, road safety, and road space challenges.
With the growth in electric vehicle sales expected to reduce motor tax, fuel excise, and VRT receipts in the future, the tax experts emphasized the need to adjust tax structures over time to maintain Exchequer receipts. They pointed to France as an example, where a weight-based tax has been introduced as an additional charge for petrol or diesel cars exceeding a certain weight limit, with a cap and exemptions for electric vehicles.
According to the Tax Strategy Group, the French tax model offers a way to incorporate environmental objectives while minimizing distortions in the market, suggesting that a similar approach could be adopted in Ireland.
According to the source: The Journal.
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