Car dealers are calling on the Government to defer the introduction of the proposed increases in Vehicle Registration Tax (VRT) announced in Budget 2021 until a comprehensive analysis of their impact on carbon emissions is undertaken.
The Irish Car Carbon Reduction Alliance (ICCRA) said the VRT increases in Budget 2021 will negatively affect sales of all new cars, including electric cars.
The alliance said the latest proposed changes will add at least €1,000 to the average price of a car.
"Penalising motorists through tax hikes is not going to achieve the emission reductions that the Government is seeking.
"However, it is likely to ensure that it misses its carbon emissions target again, resulting in significant financial penalties from the EU that can be avoided," Denis Murphy, the ICCRA's spokesperson, said.
Mr Murphy noted that Ireland has the second highest rate of car taxation in the EU and the second most expensive cars. New cars, which are more carbon efficient, were already taxed beyond the affordability of most Irish motorists, he added.
He also said that automatic cars, which are purchased by motorists with mobility issues amongst others, are also being particularly adversely affected.
Even electric vehicles have not escaped, which flies in the face of the Government's stated intention to reduce carbon emissions, he added.
Mr Murphy also said the proposed VRT increase will just encourage people to hold onto their current car for longer, resulting in thousands of older, less carbon-efficient models on Irish roads for years to come.
"In contrast, the average new car sold next year will emit 28% less CO2 than the average car currently on Irish roads, so for every car replaced in 2021 with a newer cleaner car, we can achieve significant emission reductions," he added.
Car dealerships are now closed as part of the Level 5 Covid-19 restrictions and Denis Murphy said the six week lockdown is in the period when over 60% of new car orders for January are taken.
"Many dealers have moved the sales process on line but this will not compensate for the reduction in new car orders which dealers are facing over the next six weeks. This will result in a significant fall in the new car market in January," he added.
He also said that car dealerships will have to deal with Brexit in January and the significant disruption this will have on businesses.
"We could face a situation where the new car market has collapsed and the supply of used cars from the UK has been terminated. With reports suggesting further lock-downs in the New Year, many car dealerships, like so many other SMEs in Ireland, may never reopen in 2021 and those that can could struggle to stay open," he warned.