How one year on your num­ber­plate can quadru­ple car tax bill

The Irish Mail on Sunday - - PERSONAL FINANCE - By Bill Tyson

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

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