Budget 2009 Summary

Carbon Levy

The Minister for Finance, Brian Lenihan TD announced that the Government is committed to introducing a carbon levy in the country. The Commission on Taxation has been asked to examine this matter. As the Commission’s report is not expected until September 2009, we await Budget 2010 for further developments on carbon taxation.

Environmental Taxation

The Minister introduced:

  • A flat rate levy in the major urban areas of €200 per annum where an employer provides car parking facilities for employees
  • A tax incentive to promote cycling to work. The exemption will be capped at €1000 per employee. Employees who partake in this scheme will not be liable for Benefit in Kind (BIK).

According to the Minister, these initiatives seek to encourage greater use of public transport and ease congestion in our major cities. He will also bring forward measures in the Finance Bill to relate benefit-in-kind on cars and mileage to CO2 emissions. These measures, together with expenditure decisions and enhancements to capital allowances for energy efficient products for businesses, will make a positive contribution to reducing Ireland’s carbon emissions.

The Minister also introduced a new tax incentive scheme to facilitate the relocation of Seveso-listed industrial facilities which hinder the residential and commercial regeneration of Docklands in urban areas. The EU Seveso Directive seeks to protect public safety by placing land-use restrictions on new residential and commercial development near locations where potentially dangerous activities are undertaken. This scheme will be subject to clearance by the European Commission from a State Aids perspective.

Motor Tax

  • Motor tax rates are to be increased by 4% for cars below 2.5 litres and CO2 bands A to D.
  • A 5% increase will apply to cars above the 2.5 litre threshold and CO2 bands E, F and G.
  • Goods and all other vehicles will also increase by 4% with no increase for electric vehicles.

The new rates will apply to motor tax discs and trade licenses taken out for periods beginning on or after 1 January 2009.

Energy Efficiency in Business

The Minister announced an extension of the range of energy-efficient equipment purchased by companies that can qualify for accelerated capital allowances. These will include energy-efficient data server systems and - vital in these times of high energy costs - electricity provision equipment and control systems as well as alternative fuel vehicles.

Air Travel Tax

The Minister announced the introduction of an air travel tax, effective from 30 March, 2009. A general rate of €10 for trips in excess of 300km and a lower rate of €2 for shorter journeys will apply to all departures from Irish airports.

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