For Oral Answer on : 16/12/2021
Question Number(s): 136 Question Reference(s): 62068/21
Asked by: David Stanton T.D.
To ask the Minister for Finance if research is being undertaken by his Department regarding the potential impact on motor tax revenue arising from an increased take-up of electric vehicles; and if he will make a statement on the matter.
The 2021 Climate Action Plan and the Programme for Government set out ambitious commitments for emissions reductions. Road transport is a sector earmarked for radical decarbonisation, and motor vehicle taxation is an important policy lever in achieving these goals. A significant uptake in electric vehicles (EVs) forms a key part of targets on emissions reductions from road transport, and the motor tax system reflects this ambition. The rates structure increases progressively according to the emissions profile of a vehicle; EVs are therefore liable to motor tax at the lowest rate. As the national fleet becomes increasingly electrified this will lead to a decline in motor tax revenue, and as such the regime is kept under constant review. The future of vehicle and road taxation has been assessed in previous tax strategy group papers and work will continue in this area.
As set out in the Programme for Government, the Commission of Taxation and Welfare has been established to independently consider how the taxation and welfare systems can be used to support economic activity, stimulate employment and prosperity, and provide for the costs of public services and supports. The Commission’s terms of references specify that it will “examine how the taxation system can be used to help Ireland move to a low carbon economy as part of the process of meeting its climate change commitments as set out in the Climate Action and Low Carbon Development (Amendment) Bill 2021. This will include ensuring the sustainability of environmental tax revenue resulting from decarbonisation of the economy.” The report will be submitted to the Minister for Finance in mid-2022 and its findings will inform any policy considerations on the future of motor tax policy.