Minister’s Brief

More fundamental threats to tobacco revenues come from more legitimate sources:
Consumption trends are in decline with less people smoking and those who do
smoking less. The Health agenda “A Tobacco Free Ireland” sets a target of less than 5%
smoking prevalence in 2025, this figure has already fallen from 28.3% in 2003 to 19.5%
in 2014. Additional Health-related initiatives, such as standardised packaging, are
designed to encourage reduced consumption.
The move towards alternative/novel products such as e-cigarettes, which is not
currently subject to the Tobacco Products Tax, and heated tobacco products, which
may fall under the definition of ‘other smoking tobacco’, thus attracting a lower rate
of duty.
VRT
2003
€m
2007
€m
2010
€m
2011
€m
2012
€m
2013
€m
2014
€m
2015
€m
VRT 819 1,406 383 388 379 437 542 648
TOTAL
Excise 4,735 6,003 4,834 4,871 4,759 5,006 5,131 5,428
RECEIPTS
% of total
Excise
17% 23% 8% 8% 8% 9% 11% 12%
Introduction
Vehicle Registration Tax (VRT) is a tax chargeable on the registration of motor vehicles in the
State, and has been in place since 1993, when it replaced the Motor Vehicle Excise Duty. VRT
is levied as a percentage of the open market selling price (OMSP) of a passenger motor car.
Since 1 July 2008, both VRT and Motor Tax on private motor cars have been calculated on the
basis of CO2 emissions, so that motor cars with higher emissions attracted a higher tax
liability. Car registrations and VRT receipts are, to a large extent, driven by the strength of the
economy. Revenues collapsed from a high of €1,406m in 2007 to a low point of €379m in
2012, before a recovery in the economic cycle allowed receipts to pick up in 2013 and grow
significantly in 2014 and 2015.
Challenges
As mentioned above, VRT is divided into bands with lower rates charged on lower CO2
emitting vehicles. This, together with EU green initiatives, has incentivised manufacturers to
develop cleaner and more energy efficient cars, with more and more vehicles falling into the
lower rates of VRT. This in itself puts downward pressure on the VRT receipts. The character
of VRT and the way it is applied in Ireland can give rise to charges from the EU Commission
that it imposes barriers to the freedom of movement of goods and service. In this regard, the
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