Sustainability has been saved
Finance Bill 2021
Finance Bill 2021 reflects a number of measures announced in Budget 2022
to help progress Ireland to a low carbon economy as part of the process of
meeting its climate change commitments.
As announced in the Budget the key sustainability measures are predominately aimed at transport/travel and our reliance on fossil fuels. Taken as a whole these measures are designed to both penalise the continued use of carbon producing fuels and encourage more sustainable options.
The downside here is the increase in Carbon Tax by €7.50 per tonne which increases petrol and diesel by approx 2 and 2.5 cent, respectively, per litre and Vehicle Registration Tax (VRT) which is increased to target those vehicles that produce most Carbon.
In contrast to this, the percentage increase to VRT on new vehicles is lower where the vehicle is more efficient/environmentally friendly. For Category A vehicles which have the lowest emissions the rates remain unchanged. To incentivise increased use of electric vehicles VRT relief is extended to 2025. Additionally, for Benefit-in-Kind (BiK) purposes, for battery electric cars and also vans, the original market value of an electric vehicle will be reduced by €35,000 for 2023, €20,000 for 2024, and €10,000 for 2025.
Accelerated Capital Allowances (ACA) for Energy Efficient Equipment is being extended for Gas Vehicles and Refuelling Equipment for three years (to 31 December 2024). Thescheme will now also include hydrogen powered vehicles and refuelling equipment.
A small exemption from Income Tax was introduced in respect of profits not exceeding €200 from ‘micro-generation’ of electricity by households.
Ireland has pledged to do its part to limit temperature increase through the 2015 Paris Agreement with a target of being carbon neutral by 2050.
Sustainability is rightly seen as ‘the most important issue of our time’ and given its importance we would have liked to see a more far reaching package of incentives. Is this a case of an opportunity lost? Incentives to enhance Ireland’s attractiveness as a location for Sustainable Finance or targeted initiatives in the renewables sector would have been very welcome. Sustainability includes Environmental, Societal and Governance matters (ESG) which are fast becoming a determining factor for increasing numbers of domestic and international investors. We need to be a leader in Sustainability and our tax policy should be at the very centre of that leadership.