How one year on your numberplate can quadruple car tax bill
Thinking of buying a car – or wondering if it’s time to sell the one you have?
A new element to take into account is the impact of the car’s age on the cost of both tax and insurance.
Older cars may not be as much of a bargain as they appear as key age thresholds penalise older cars quite savagely.
These penalties were highlighted in a recent survey by taxback.com, showing how drivers could pay three or four times if their car dates from before mid-2008.
In effect, the current tax (and insurance) system rewards those with higher incomes who can afford post-2008 cars, and penalises lower income earners, said Taxback boss Barry Flanagan.
‘Drivers who are just outside the cut-off point are frustrated by having to pay up to three times more tax than for a model just a year or two older,’ he pointed out.
Cars that pass the 10- or 15year threshold are also being driven off the road by high insurance costs.
This is a harsh blow to a family struggling to make ends meet. When they are forced to sell their car, they find that its value has plummeted because it’s too expensive to tax and insure.
A 2007 Toyota Avensis, recently advertised on donedeal. ie, for example, was priced at €2,850 – but over €4,000 was sought for a model with more mileage just one year older.
The difference could be explained by the €390 tax bill for the latter, compared to €710 for the 2007 Avensis.
This must be particularly galling for young house buyers forced to commute hundreds of miles a week in older cars because they can’t afford to buy new ones or homes near their workplaces (see briefs).
Tax on cars built before 2008 is
based on engine size and ranges from €199 for the smallest engine to €1,809 for the biggest.
Cars built after that pay tax based on emissions ranging from €120 for electric cars with zero emissions to €2,350 for cars with the most emissions.
However, while reducing emissions is important, many believe that it’s not the only or most pressing environmental issue.
Diesel is increasingly seen as a ‘dirty fuel’, yet the driver of a new three-litre BMW can still pay just €590 in tax, as shown above.
A quarter of people in the taxback.com survey believe it would be fairer to scrap motor tax altogether and replace it with an increase tax on fuel so those who use their car more, pay more.
The situation as it stands penalises a person who commutes by public transport during the week.
Someone who uses a car only on weekends and clocks up just 3,000km per year pays the exact same amount of motor tax as a person who uses the same car seven days a week covering, say, 60,000km per year.
Ireland dropped 28 places last year in the 2018 Climate Change Performance Index, to 49 out of 59 countries.
There’s a need to balance environmental concerns, while ensuring that motor taxation policies are equitable and affordable for Irish motorists, says Barry Flanagan.
tread carefully: High insurance costs could wipe out the savings on an old car