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AA reaction to Budget 2012

date-icon 06 Dec 2011  author-icon Posted by Miriam O'Neill


MOTORISTS LOSS WILL AFFECT ALL HOUSEHOLDS AND BUSINESSES

The loss of disposable income from increased motor taxes will affect almost all households and businesses according to the AA. This is because it is a rise in a basic cost of living taxed as if it were a luxury.

Fuel:

 The increase in Carbon Tax means that petrol and diesel become 1.4c and 1.6c cent respectively more expensive from midnight tonight.  Prices for both will also increase by a further 2.44cent from January 1st 2012 equating to roughly a 4c increase overall when the new 23% VAT rate is introduced. That alone will add €6 per month in fuel costs for a modest family car and much more for many people. The impact will be greatest in rural Ireland where mileages are higher and alternatives fewer. It also comes on top of a year of rising prices that has seen petrol and especially diesel become much more expensive month on month.

“Fuel is a basic price component in almost every good and service in the Irish economy.” Says Faughnan. “This adds to business costs and cuts disposable income. Families will be unable to spend that money elsewhere in the economy.”

“This is basically a continuation of what the last government did. They hit fuel three times for a total of 17 cent per litre, now this latest budget adds another four cents on top.  Fuel sales are down by more than 6% this year. The result is likely to be the same – reduced fuel sales, reduced commercial activity and less money in circulation.

“It is also a tactical mistake. We used to be much cheaper than Northern Ireland and our exchequer was boosted with cross-border sales. The UK was traditionally much more expensive than us but they have deferred their duty increases while we pile ours on to the point where we have lost that advantage. In all this fuel increase could wind up costing the government money.”

Car Tax:

The annual rate of car tax is to increase.  The lower emission cars in band A and band B will face the highest increases of €56 and €69 respectively. In part this is because 70% of new car sales are now in band A and band B reflecting both consumer choice and improvements in car design. Essentially all new cars are now so efficient that all would have been classified as ‘ultra low emission’ even five years ago.

“This is going to feel like the worst sort of bad faith for drivers who bought new cars in the last 3 years and made the choice to buy clean and green.” Says Faughnan. “It will affect new car sales and it will also make people less inclined to believe future promises in this area.”

ENDS

Note to Editors:

 1. Carbon Tax:

Carbon Tax is just another name for just another excise duty (it has nothing to do with Carbon). The only difference is that it is calculated by the tonne. It is currently €15 per tonne and it is going to €20, ie a 33% increase.

As of now, carbon tax adds 4.2 c for petrol and 4.9 cent for diesel. The increase moves that to 5.586 cent and 6.517 cent respectively.

The Vat increase will add 2.4 cent per litre to petrol and diesel (the exact same for both because coincidentally they are at the same price right now).

Current fuel prices*:

Petrol  147.9 cent per litre

Diesel 147.9 cent per litre

Vat increase: 2.44 cent for petrol, 2.44 cent for diesel

Carbon increase: 1.386 petrol, 1.617 diesel

Total increase: 3.826 cent petrol, 4.057 for diesel.

*Coincidentally, petrol and diesel are at approximately the same price nationally at the moment. 147.9 per litre is estimated; the AA publishes an index of fuel prices monthly.

Prebudget breakdown of taxes per litre of petrol & diesel:

Updated 5/12/2011:

Petrol :            Pump price                             €1.479             (estimated pre AA survey)

Excise including carbon          57.662c

Nora                                        2c

Vat                                           25.7c

Total taxes:                             85.362c

Pre-tax price                           64.678c

Tax as %                                  57.7%

Diesel              Pump price                             €1.479             (estimated pre AA survey)

Excise including carbon          46.570c

Nora                                        2c

Vat                                           25.7c

Total taxes                              74.27c

Pre tax price                           73.63c

Tax as %                                  49.8%

For reference: http://www.revenue.ie/en/tax/excise/duties/excise-duty-rates.html

AA Blog on budget from last week (Monday 28/11): www.theaa.ie/blog/budget-hits-on-the-way

The AA’s monthly index of fuel prices is available here: http://www.theaa.ie/AA/Motoring-advice/Petrol-Prices.aspx

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Written by Miriam O'Neill


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5 Comments

Philip
7 years ago



Why have you failed to mention the 7.5% increase on cc based motor tax? Cc based motor tax makes up 90% of the motor tax take.

Alex
7 years ago



I am extremely disappointed with the AA and Conor Faughnan. The motor tax changes in the 2012 Budget affect drivers of older cars significantly more than owners of new cars. While the percentage increase for band A. B and C vehicles on the new CO2 system are high, they are high percentages of very very low figures. The 7.5% increase for c.c based tax is painful. I drive a 13 year old diesel Xantia that does 50mpg (so emits a low amount of CO2) but I now have to pay €660 a year to tax it. A €46 euro increase on an already punitive amount. This is just unfair.

Stephen
7 years ago



Cost of petrol and diesel should have been brought down because common men was suffering with the maintainance of his own vehicles like byke or a car.It is mandatory for the govt to have a deep look at the cost of petrol and diesel.

Pat kelly
7 years ago



Hi There have you any knowledge of what effect a euro breakup with say a 30Þvaluation back to punts would have on irish car prices

Richard Lancaster
7 years ago



Dear Sir/Madam,

My name is Richard Lancaster and I am currently in the final year of a BSc Engineering Science degree through University of Limerick in conjunction with working full time in Intel. I am completing a project on the evolution of the engine (both diesel and petrol) and as part of this project I am analysing the costs of both, by car make and model.

I am writing to you in the hope you could assist with the following queries;

– Percentage of diesel car sales versus petrol car sales in 2011 and, if possible, in previous years. Also, percentage of alternative powered cars, e.g. hybrid or electric driven cars.
– Is there a significant difference in the service costs of diesel vs. petrol?
– Do you anticipate any change in the lean towards diesel cars in 2012?

I very much appreciate any help you could provide to me.

Kind Regards,

Richard Lancaster
087 6571966



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