Major changes to the motor tax regime will cause the price of new and used diesel and petrol cars will go up by as much as €1,000.
These involve an increase in the number of tax bands for Vehicle Registration Tax (VRT), changes to the grants and tax relief on hybrids and electric cars, and replacing the diesel surcharge.
Finance Minister Paschal Donohoe is being advised to dramatically overhaul the motor taxation system and to help squeeze out second-hand UK imports.
A Department of Finance document has suggested that a €10 carbon tax hike in the next budget would be effective.
The tax currently stands at €20 per tonne of C02 and is applied on diesel, petrol, kerosene, natural gas, coal and peat.
There are now expectations of a rush to buy in the first quarter of 2020 to avoid the charges.
The proposed alternative tax regime would see the number of VRT bands increase from 11 to 14, with a new low rate of 7 per cent applied to vehicles with emissions below 51g/km.
An additional band of 8 per cent VRT would apply for vehicles between 51g/km and 80g/km.
A higher tax band applies for every 10g/km thereafter up to 201g/km and higher, where a new 39 per cent tax rate would apply.
ne issue highlighted in the Department’s Tax Strategy Group (TSG) is the high rate of diesel cars in Ireland compared with other EU countries.
It is estimated 103,976 used cars will be registered this year, almost half of all cars registered for the first time on our roads.
While the weakness of sterling is cited as one reason for a spike in imports, the TSG says the “disparity in the respective tax and regulation policies of Ireland and the UK in relation to diesel” is also fuelling the problem.
“Market sentiment has turned strongly against diesel vehicles in the UK due to the range of anti-diesel measures introduced by its government in recent years,” the TSG reported.
“This feeds into the Irish market being a convenient outlet for used diesel cars.”
It adds that the minister “must” consider this in view of the “specific contribution of diesels to environmental health issues”.