Budget 2020: What it means for motorists

The big news for Irish car buyers in Budget 2020 was that the new tax on NOx emissions will apply from January 1st, 2020 on all new passenger cars and imported vehicles. What’s NOx? It’s a term that covers all oxides of nitrogen, the gases at the centre of the diesel emissions scandal. Diesel cars create — in general — more of it than petrol cars, and it’s a major hazard to health, causing respiratory illness.

So, from January, the Government will charge for it in a new tax that replaces the previous one per cent levy on the price of diesel-engined cars (and which will this time be applied to petrol-engined cars too).

The charge works on a sliding scale and is calculated on the car’s emissions of NOx in milligrams per kilometre (mg/km). For the first 60mg/km, it’ll be charged at €5 per mg. Between 61- and 80mg/km, it’ll cost €15 per mg, and above 80mg/km it rises to €25 per mg.

The effect on most new cars will be small. The Department of Finance reckons that the cost will be, on average, around €215 for a new diesel-engined car (in line with what the old one per cent levy cost) and around €115 for a petrol-engined car. 

For imports the charge could be much higher, potentially more than €2,500 for some popular older models, which have higher emissions of NOx. Will it be enough to stem the huge tide of imports from the UK seen in recent years? We’ll have to wait and see.

Other measures introduced in the budget that will be of interest to motorists include a €6-per-tonne increase in Carbon Tax, which will equate to an extra 2c per litre on the cost of petrol and diesel. For an average car, that will mean around €1 to €1.20 extra when you fill up.

There has also been more money earmarked for improving the electric car charging network (€3 million) and for grants for buying an electric car (€8 million). The Government will also extend the scheme that sees benefit in kind tax reduced to zero for company electric car users through to 2022. The VRT rebates for hybrid and plug-in hybrid cars have also been retained for at least one more year.

As for the wider VRT system, we had been expecting major changes to that too, but it now seems as if that will be deferred to 2021.