Tax group eyes diesel levies and motor-tax bands ahead of budget

Increasing the price of diesel at the pumps and overhauls to the motor-tax regime are among the recommendations of the Tax Strategy Group’s pre-budget review, published on Monday.

Among the changes it proposes is the equalisation of diesel and petrol excise duties, suggesting a 2.32 cent/litre increase per year for the next five years, or a 1.16 cent/litre rise over the next decade.

On motor tax, it suggests increasing the number of vehicle registration tax (VRT) tax bands from 11 at present to 20. The new rates would vary from 7 per cent for vehicles with CO2 emissions up to 50g/km, to 39 per cent for cars emitting 191g/km or over. The group also suggests adjusting the NOx surcharge bands applied to newly registered cars so the lowest band is 1-40 mg/km of NOx instead of the current 1-60 mg/km of NOx.

“Essentially there is an argument that VRT charges were far too low during the last decade as the rates applied were based on vastly underestimated CO2 values,” the paper states.


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