Gormley reforms car tax based on emissions

Dáil Report: Fundamental reforms of motor tax will result in charges being based exclusively on CO2 emissions. Vehicles on the lowest bands will incur a levy of €100, compared to €2,000 for those with the highest emissions.

Announcing the reforms in the Dáil yesterday, Minister for the Environment John Gormley said the changes would come into effect from July 1st, 2008, and would only apply to new cars. All cars registered before then would continue to be taxed under the current engine-size system.

Introducing what he called the "first ever Irish carbon budget", Mr Gormley also announced the banning of incandescent or high-energy light bulbs from January 2009, a move he claimed would reduce emissions by up to 700,000 tonnes a year once all old bulbs were replaced in domestic light fittings.

He said it would save consumers €185 million in electricity costs.

"We must reach a situation where our estimates of the carbon impact of the Budget are as good as our estimates of the financial and economic impacts of the Budget. Carbon must become the new global currency if we are to successfully tackle climate change, and we must then de-carbonise society. We must put a price on carbon."

The projected overall emissions drop in the climate change strategy to 66.2 million tonnes a year up to 2012 was still 3.2 million tonnes above the Government's annual 3 per cent target and would mean the State would have to buy carbon credits at a cost of between €30 million and €60 million. However, further steps would be taken to reduce emissions to get to an annual 3 per cent reduction, and if they could do that "we will need to purchase only one million carbon credits on average each year".

However, Fine Gael spokesman on natural resources Simon Coveney claimed the Minister was calculating the figures as if the climate strategy targets were a "given" when they had yet to be implemented. He believed the carbon credit costs would be somewhere between €150 million and €325 million.

Mr Gormley announced a seven-band table of charges under the motor tax carbon emissions reforms. "If we are serious about addressing emissions from cars we need to move to a system based solely on CO2 emission levels."

The changes "will also include a new mandatory labelling system for cars based on emission levels similar to the energy rating label in place for white goods".

He said road transport generated about one-fifth of the EU's CO2 emissions, with cars responsible for about 12 per cent.

However, in Ireland "we have seen an increase in emissions from road transport of around 180 per cent between 1990 and 2006".

Currently 12 EU states levy car taxes that are totally or partially based on CO2 emissions or fuel consumption or both.

Under the new system the lowest level of emissions - less than 120g/km - would result in a charge of €100, while the top band tax will be €2,000, reflecting CO2 emissions of over 225g/km.

Mr Gormley said the change "would influence the purchasing decisions of consumers by rewarding the buyers of low-emitting cars and charging a premium on less efficient vehicles".

From January 1st, 2009, all light bulbs sold on the Irish market will have to be energy efficient and incandescent bulbs will be banned.

"A national standard will create certainty for manufacturers and suppliers about the lamps that can be supplied with the desired environmental outcome, both in terms of reduced greenhouse gas emissions and reduced energy consumption."