Ireland Goes Green With CO2-Based Car Tax

07 December, 2007 08:00:00

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New-car buyers in Ireland will pay a CO2 tax and face higher rates for cars with big engines starting next year.

Finance Minister Brian Cowen announced yesterday that Ireland’s vehicle registration tax (VRT) will be linked to a car’s CO2 emissions rather than engine size starting in July.

VRT is a one-time tax levied on new cars. Currently it is calculated using the car’s selling price plus sales tax. The rates range from 22.5 percent to 30 percent depending on engine size.

From July all new cars registered and any imported into Ireland will be subject to seven tax bands ranging from 100 euros a year for the new car that emit 120 grams per kilometer or less up to 2,000 for new cars with CO2 emissions above 225g/km, those with the highest emissions of gases which are blamed for global warming.

Existing cars will continue to be taxed based on engine size.

Buyers of new cars will have to make a one off payment of between 14 and 36 percent of its value in tax.

From July all new cars registered
and any imported into Ireland will
be subject to seven tax bands
ranging from 100 euros a year
for the greenest up to 2,000 for
those with the highest emissions
of gases which are blamed for
global warming.

Existing cars will continue to be
taxed based on engine size.

Ireland's rapid economic growth over the last 13 years has driven up energy consumption and with it emissions and waste levels, meaning the country often falls foul of the EU over its environmental record.

A new car sold in Ireland also will have a sticker that tells potential customers how energy efficient the vehicle is. The sticker will resemble those used on appliances such as washing machines and refrigerators.

Some carmakers welcome the change.

“Ford has always contended that VRT in Ireland is an excessively penal tax. However, we welcome the minister’s efforts to make the system somewhat more equitable by moving it to a CO2 emissions basis,” Eddie Murphy, managing director of Ford Ireland, said in a statement.

French government also announced green taxes on gas-guzzling cars and a state-funded discount for vehicles that emit small quantities of CO2.

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