What does Budget 2021 mean for motorists?

A range of measures announced in today's Budget are set to impact car owners and car buyers. Moto...
Stephen McNeice
Stephen McNeice

18.13 13 Oct 2020

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What does Budget 2021 mean for...

What does Budget 2021 mean for motorists?

Stephen McNeice
Stephen McNeice

18.13 13 Oct 2020

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A range of measures announced in today's Budget are set to impact car owners and car buyers.

Motorists are among the groups set to see the most significant changes as a result of the measures announced by Finance Minister Pascahl Donohoe today.

Here are some of the key measures announced by Minister Donohoe:

  • Carbon tax increases by €7.50 a tonne from midnight. The hike means drivers will pay just over 2 cent more per litre of petrol and 2 and a half cent extra for a litre of diesel.
  • Motor tax rates are unchanged for almost all cars, but the most pollutant cars in the post-2008 regime will see increased taxes. A new third motor tax table will also be opened for cars registered from January 1st 2021, taking account of new emissions tests.
  • Changes to vehicle registration tax (VRT) regime based on emissions, with the changes aimed at incentivising people to buy low emission cars.
  • There will be changes to reliefs for plug-in hybrid vehicles and battery electric vehicles - but Minister Donohoe insisted changes to VRT rates 'compensate for the changes'.
  • Nitrogen Oxide (also known as NOx) surcharge bands will be adjusted so that higher NOx emitting vehicles will pay more.

Minister Donohoe said the new VRT regime "will be based on emissions performance levels which are much closer to real world performance levels than is currently the case".

He explained: "The modified new structure of rates and bands for VRT and motor tax have been adjusted to take account of the fact that cars under the new test record higher CO2 emissions.

"We have strengthened the environmental rationale of the VRT regime to encourage motorists who are in the market for a new car to make greener choices."


There have been a range of reactions to the new measures announced today.

Speaking on The Hard Shoulder, Kerry TD Michael Healy-Rae criticised some of the environmental measures announced today.

He stressed he is not a climate change denier, and wants to protect the environment.

However, he argued: "I want to make sure the people of today have enough ability to keep their homes warm, to come and go to work, to retire in peace and dignity, and have proper healthcare... and at the same time not be crippled by additional taxes.

"The poor motorist who is going to work - if they're lucky enough to have work to go to - is going to be hit from tonight on."

Deputy Healy-Rae also suggested plans prepared for Government have suggested extra charges for electric car drivers.

He said: "We're being told to change to electric vehicles, and they're already trying to devise a way of getting in excise duties they're going to miss from people changing from petrol and diesel."

However, environmental commentator John Gibbons says there are some much needed changes in the system.

He told Newstalk: "We've basically been letting high polluting cars away with murder in terms of VRT.

"The reason is they've been getting away with this is they're using this antiquated system that's being used by the motoring industry.

"We will be realigning our CO2 system with reality."

Mr Gibbons also stressed that the increases to carbon tax "isn't a revenue scraping exercise - this is a behaviour transition exercise".

He said: "We need to do it: the vested power of the fossil fuel industry - seen through the motor sector which seems to represent it - is profound. They have resisted the transition away from dirty fossil fuels."

He described the budget as 'between pale green and medium green... not deep green'.

However, he suggested that the country is on the right path, even if this year's Budget was a '7/10' in environmental terms.

Main image: File photo. Picture by: Sebastian Gollnow/DPA/PA Images

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