The average price of a new car in Ireland has soared by €4,500, with a third of the cost going to VAT and VRT

The average price of a new car jumped nearly €4,500 to €38,665 this year, up 13%.

and nearly a third of that went to the taxman in VRT and VAT payments.

The average amount of VAT levied on a car was €5,905 while VRT was €5,851, according to new figures obtained from the Society of the Irish Motor Industry (SIMI) by the Irish Independent.

Altogether, that means nearly £12,000 – almost a third of the price of an average new car – went to the taxman.

In total, new car buyers paid €514,415,180 in VAT, while the VRT bill came to €509,661,031.

That leaves the Exchequer benefiting from more than €1 billion in new car sales through the end of July.

The vast majority of cars are purchased in the first seven months of the year, as it encompasses two registration periods beginning in January and July.

And just because your car has zero emissions doesn’t mean you’re evading taxes. The figures show that an average of €8,733 was invoiced in VAT and €2,250 in VRT on new Battery Electric Vehicles (BEVs).

The higher than average VAT paid is largely due to the fact that many BEVs are more expensive than petrol or diesel vehicles to start with.

The lower than average VRT bill comes from partial or full exemptions from this tax as part of the government incentives to purchase a BEV.

Overall, new car prices at the end of July were up 13% from a year ago.

It seems that the only way is to raise prices, at least in the first half of 2023, as demand is expected to greatly exceed supply.

Prices are based on official estimates by the Revenue Commissioners of a car’s market value.

They calculate the vehicle registration tax (VRT) on this amount. The figure is known as the open market selling price (OMSP).

Actual selling price may vary at dealer level depending on demand, model, trade-in and time of year.

A wide range of factors contributed to the 13% increase this year.

They include production delays due to the pandemic, a supply shortage due to pent-up demand, higher specification levels, shortages of microchips for use in automotive systems, the war in Ukraine and rising costs. Energy.

BEV production has been hit by increases in raw material prices of up to 400% in the case of lithium (used in batteries).

SIMI chief executive Brian Cooke said any price increase automatically means an increase in VAT and VRT. He said high tax levels are a major reason why relatively few new cars have been purchased over the past decade.

“The VRT has been increased in each of the last two budgets, but if we are serious about maximizing emissions reductions from new vehicles, we need to stop increasing the VRT and continue our support for electric vehicles.”

He asks the government not to add further increases to the VRT or the road tax in the budget.

He said it would only increase the cost of new cars, dampen demand, add to inflation and reduce consumer confidence.

“The retention of EV carriers is also vital as we strive to create an active market for used electric vehicles.”

Comparing 2019 and 2022, there was an overall drop of 19% in the average CO2 emissions (WLTP) of new passenger cars registered.

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