What's the news?
Having had 24hrs to digest Michael Noonan's budget, it becomes apparent that while it was mostly a neutral budget for the car-owning and driving population of Ireland, there were a couple of interesting points.
The headline, as far as motoring is concerned, seems to be the extension of the €5,000 rebate of Vehicle Registration Tax (VRT) when you buy an electric car for a further five years, bringing it to 2021. That is an interesting date, because, by 2020, almost every major car maker is going to have a 500km range electric car on sale. Expensive they may well still be at that point, but the tipping point to mass vehicle electrification is coming faster down the road than most realise, and there are two possibilities here. On the one hand, the government could be being quite canny, assuming that the Irish car buyers will play a conservative game and stick with his or her diesel for some time yet to come. It's certainly possible though that we might suddenly en masse switch to electric motoring as better and better EVs become available, which could for a year or two at the end of this period end up costing the government quite a chunk of VRT revenue.
On the hybrid front, Mr Noonan has been far more clever. Extending the €1,500 VRT relief for hybrids and the €2,500 relief for plug-in hybrids looks optically good when it comes to promoting the switch to at least part-electric motoring, but neatly gives the exchequer a limited exposure to the fact that hybrids and plug-ins are fast becoming more common on our roads, and are set to do so ever more over the next 24-36 months. Eventually, they will become so commonly bought and used that evening up the playing field will really only be the fair thing to do, but the shorter timespan of the incentives does seem a bit mean, given the current proportion of sales.
There were no nasty surprises on the motor tax nor VRT front aside from that, but it is a little surprising that the Department of Finance isn't looking more at the imports of cars from the UK. Imports have spiked sharply upwards since the UK's vote for Brexit and the tumble in the value of Sterling now means that even buyers spending as little as €7,500 on a used car can now make considerable savings by shopping in Britain or Northern Ireland. The arrival of more than 50,000 imports so far this year is already putting second-hand values under stress, but it's possible that the government is playing a laissez-faire game here, and trying to avoid the prices of used cars rising too much, putting them out of the range of buyers already under pressure from spiking insurance premiums.
Speaking of which, it was notable and just a touch shameful that the cost of motor insurance, which is becoming untenable for many, was not given even a voir dire mention in the budget speech. Putting the cost of insurance on the reliably long finger of a committee of inquiry is very far from what the Irish motorist needs right now.
There was one little interesting nugget in the budget when it came to fuel. Diesel and petrol duty were left alone, in spite of falling wholesale oil prices, but there was a tiny incentive for natural gas fuel announced. For the next eight years, LPG and CNG will be taxed at the minimum possible rate, a seemingly odd decision in a country where virtually no-one uses gas-powered cars anymore. Perhaps this has something to do with the push forward of plans to tackle climate change. CNG and LPG are much lower in Co2 than petrol or diesel, and the existing car fleet can be modified, albeit expensively, to run on them. With the Paris Accords likely to put even more pressure on the Irish government to reduce Co2 emissions from transport, and diesel under fire from environmentalists touting its air pollution issues, perhaps gas power is being seen as a potential way of squaring that circle until mass vehicle electrification gets into full swing.
As with most items of budgetary expenditure and tax, we'll simply have to wait and see.