Motor dealers have criticised a suggestion that the tax on the purchase of a range of vehicles, including electric vehicles, could be increased in the upcoming Budget, describing it as deeply concerning.

A recent paper by the Tax Strategy Group (TSG) at the Department of Finance said the Government could consider changes that would result in Vehicle Registration Tax or VRT going up by €1,500 on average on electric vehicles (EVs) and €1,300 on low emitting vehicles.

"It is entirely unconscionable that the retrograde step of effectively increasing VRT on Electric Vehicles and low emitting cars is under consideration when we are at such a critical juncture in driving down emissions from transport," said Society of the Irish Motor Industry Director General, Brian Cooke.

"The Motor Industry, while currently operating at recession levels in terms of new car sales, is now emerging from the pandemic, and is a sector that is vital to the economy, as the second highest contributor to retail consumer expenditure."

In a report prepared ahead of Budget 2022, the TSG proposed that VRT on cars with emissions above 100g/km could be increased by 2-5%.

It also called for a cut in the cap for tax relief on EVs to €40,000, with the current relief of €5,000 reducing gradually from €30,000 onwards.

SIMI said if adopted, the proposed tax changes would encourage people to keep their older more polluting cars for longer, maintaining and possibly even adding to the current number of 900,000 cars over 10 years old already on Irish roads.

This would, the organisation claims, undoubtedly impact negatively on Ireland's ability to reach its climate change targets.

Instead of what the TSG has suggested, SIMI said the Government should be helping consumers to make a real and informed choice to remove the oldest and most polluting vehicles from the Irish fleet.

It also should be putting forward plans to assist as many people as possible to upgrade to cleaner newer vehicles.

It is also calling for incentives to move the new car market more rapidly towards electrification with an integrated achievable plan.

In the year to the end of August, 7,053 new electric vehicles were registered compared to 4,013 in the same period last year.

"The consumer, together with the Industry has delivered over 120% growth in Electric Vehicle sales alone this year," Mr Cooke said.

"This level of achievement would not have been attainable without the Government supports currently in place."

"To reduce the EV supports now, or to increase VRT on cars already burdened by last year’s substantial tax increases, only serves to add tax to consumers who want to make better environmental choices."