Mixed reaction to Budget 2024 from automotive industry

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Budget 2024, by Minister for Finance Michael McGrath, contains some measures specific to motoring, has drawn mixed reaction and comment.

Budget Measures

  • VRT – no increases in VRT for EVs or ICE vehicles.
  • VRT Relief on EVs – this was due to expire at the end of this year, but has been extended for a further two years out to the end of 2025. This means EVs with a value of €40,000 will continue to pay no VRT, while the tapering relief between €40,000 and €50,000 also remains in place.
  • Benefit-in-Kind
    • The €10,000 deduction applied to Original Market Value Deduction for certain categories of vehicles is extended for 2024.
    • Extension of EV tapering mechanism applied to BIK relief for Electric Vehicles of €35,000 to 31/12/2025, €20,000 in 2026 and €10,000 in 2027
    • When the two extensions above are combined the 0% threshold for BIK on EVs will be:
      • €45,000 in 2024 (the same as 2023)
      • €35,000 in 2025
      • €20,000 in 2026
      • €10,000 in 2027
  • Other motor related taxes
    • Excise on petrol/diesel – extension of reliefs due to expire on Oct 31st
      • Increase will now be – 50% on April 1st 2024; 50% on Aug 1st 2024.
    • Increase in Carbon Tax from Oct 11th as scheduled
    • Accelerated Capital Allowances on EVS – extended for 3 years

Commenting on Budget 2024, SIMI Director General Brian Cooke: “SIMI welcomes the measures announced in today’s Budget, in particular the extension of the current VRT and Benefit-In-Kind (BIK) reliefs for Electric Vehicles. In addition, the retention of the current VRT regime allied with the EV reliefs provides stability and clarity to the Motor Industry and motorists at a time of great uncertainty. The EV supports underline the Government’s commitment towards the electrification of the national fleet, which is of critical important as we strive to meet our emissions’ reduction goals. We still await clarification of the ongoing investment in both the charging infrastructure and the SEAI purchase grants, which are also vital to the ongoing success of the EV project.”

However, Budget 2024 is seen as a mixed opportunity to reduce Ireland’s Transport Emissions.

 Commenting on Budget 2024, GeoTab Vice President, Ireland & UK, David Savage said: “Budget 2024 represents a missed opportunity to tackle Ireland’s transport emissions. While the measures that were introduced are to be welcomed, we believe that they do not go far enough – particularly in light of the SIMI September data which showed that EV sales could be stalling. Today’s announcements such as the extension of Benefit in Kind supports and VRT relief for electric vehicles were positive, but in reality fall short in terms of the kind of measures required to push the momentum behind zero emission vehicles into fifth gear.”

“The extension of BIK supports is recognition that companies are better placed to afford EVs, but the business community is lagging behind the general public in terms of adoption so there was the potential to introduce new initiatives. For example, in the UK there is a capital allowance scheme for purchase of EVs that lets businesses write off 100% of the cost against the taxable income for the year that it was purchased, which could have been replicated here.”

“Similarly while VRT relief on purchases of battery electric vehicles is to be welcomed, it is not enough of a carrot for motorists to make the switch in their droves for the Government to have a realistic chance of achieving its goal of having 945,000 electric vehicles on the roads by 2030. We need to see additional support as opposed to extending existing initiatives. Potential incentives could have included a scrappage bonus for owners of older, higher polluting ICE vehicles similar to schemes in other countries.

“Ireland needed to go beyond restoring the previous level of subsidies that was originally available for the purchase of electric vehicles as the current level of EV sales simply is not high enough to hit the Government’s 2030 target. Ramping up the momentum behind EV sales won’t simply help the Government achieve its Climate Action Plan targets, it would also deliver significant health benefits as a result of the reduction of emissions; savings would be achieved through the lower cost of ownership that EVs deliver over their lifecycle; and more people would shift to public transport.”