Car tax up 400% on pre-2007 vehicles

 In News, Tax

The government has increased the vehicle licence tax on 900cc petrol vehicles produced before July 2007 by 400% according to calculations by the consultancy Deloitte.

According to Deloitte, drivers of vehicles with a May 2005 number plate that paid €19.34 in the tax known as Imposto Único de Circulação (IUC) in 2023 will pay an IUC of €96.92 (an increase of 401%) over the next years.
At issue is a measure in the proposed State Budget for 2024 (OE2024) that changes the tax rules on IUC for Category A vehicles with number plates before 2007 and motorcycles (Category E), establishing that these will no longer be taxed solely based on cylinder capacity (as is the case now), but now on their environmental impact.
The OE2024 however, has a safeguard clause establishing that the tax may not increase in any one year by more than €25.
The Finance minister Fernando Medina said that the tax would go ahead despite calls for the government to backtrack on the tax hike with an online public petition against the measure already garnering 166,000 signatures.
“Cars licensed before 2007 today benefit from an annual tax that is, on average, one quarter of more recent vehicles since these more recent vehicles are less polluting. This is an unfair situation when tax on newer cars is higher”, he said on Tuesday at the end of an Ecofin meeting in Luxembourg.
“We decided to take a gradual approach when deciding this measure. It is an increase of €25 per year, or a maximum or €2 per month,” he said.
“We’re talking about a measured and limited increase in IUC that will be accompanied by incentives to scrap old vehicles and purchase electric vehicles in 2024”, he added.