SIMI: Reaction to Budget 2012

Alan Nolan, Director General of the SIMI (pictured) says they are disappointed at the decision to implement the VAT increase on the 1st of January. They had asked the Government to defer the increase until after the first quarter peak-selling period when more than half of all new cars are sold. "We had also pressed for improvements to the registration plate system to address our acute seasonality in sales which we still believe should be implemented even at this stage."

For those with pre 2008 cars, annual Road Tax will go up by 7.5 per cent which works out at an average of about €35. For those who bought after 2008, the C02-based Road Tax will increase by 7.5 per cent for all bands except A, B and C which increase by €56, €62 and €28 respectively.

Alan Nolan added that it is hugely important that the environmental incentive to buy a new car still remains in place. SIMI still fears that VRT and Road Tax face further focus in next year's Budget but welcome Minister Noonan's promise of consultation with the Industry on both these issues in advance of decisions being taken.

"As a result of the Carbon Tax increase (effective from midnight last night) petrol will increase by 1.4c and diesel by 1.6c. However, from the 1st of January next year, with the impact of the 2 per cent VAT increase, petrol will be 3.9c and diesel 4.03c higher, which is 2.7 per cent more than January last year. For the average car that travels 16,000km per year, these fuel tax increases will add an extra €50 to the cost of motoring.

Nolan says: "The increase in fuel duty is another unwelcome cost for the motorist. While none of these increases by themselves may appear to be a major burden, the combination of these increases will impact very significantly on motorists."