BUDGET 2022 IS a mixed bag for motorists, who have already noticed sharp increases in the price of fuel in the past year, industry representatives have said.

But compared to last year, when the Vehicle Registration Tax (VRT) system was overhauled for the first time in a decade, the changes announced today aren’t particularly dramatic.

A €7.50 increase on the current rate of Carbon Tax applied per tonne of carbon emitted — which comes into force from midnight tonight — will raise the price of a litre of diesel and petrol by 2.5c and 2.1c respectively.

It means that the average price of a full 60-litre tank of diesel will increase by €1.48.

The price of a full 60-litre tank of petrol, meanwhile, will rise by €1.28.

These increases were expected, said Paddy Comyn, Head of Communications at AA Ireland.

“But this is on the back of what is a 25% increase in prices of petrol and diesel over the past 12 months,” he added.

Petrol prices have risen this year largely due to international factors, including a rebound in global demand for oil and diplomatic disputes among members of the Organization of Petroleum Exporting Countries (OPEC) over pandemic-linked production cuts.

Some minor changes to the VRT, aimed at incentivising drivers to switch to electric vehicles, were also announced in today’s Budget.

There are currently 20 VRT bands, introduced last year and based on the vehicle’s level of carbon dioxide and nitrous oxide emissions. Drivers of cleaner cars like electric vehicles and hybrids pay a lower rate of VRT than those who drive less environmentally friendly vehicles.

Today, Minister for Finance Paschal Donohoe announced a 1% increase for vehicles that fall between bands nine and 12, a 2% increase for bands 13 to 15 and a 4% increase for bands 16 and 20.

There will be no increase in VRT for drivers of cleaner cars in the first nine bands.

The Minister also announced an extension of the €5,000 relief for electric vehicles to the end of 2023.

Speaking to The Journal, Comyn said the changes to the VRT announced as part of Budget 2022 aren’t dramatic.

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“They’re only going to hit the higher polluting vehicles,” he said.

However, he said, “For some motorists, moving into an electric vehicle is as yet too far a stretch, and they have no choice but to now pay more to get around, as the public transport network remains imperfect, especially outside of the capital.”

Brian Cooke, Director General of the Society of the Irish Motor Industry (SIMI), said the VRT increases are “hugely disappointing” against the backdrop of Covid-19 and increased fuel taxes.

“These increases only add to the already heavy tax burden on new cars, and will serve to slow down the renewal of the fleet, acting as a barrier to reducing emissions,” he said.

Cooke welcomed the extension of the VRT relief for electric vehicles to 2023.

He added, “This brings a degree of certainty to both consumers and the Industry on the vital Electric Vehicle Project and will help increase EV sales over the next two years.