Commenting on the reform of Vehicle Registration Tax, Aidan Fagan, Partner, Tax, Deloitte said:

“It is open to question how much environmental taxes actually help in fighting global warming. Tax adds to inflation while the cost of administering the tax generally falls on the business community. Businesses are then forced to produce more in order to maintain adequate profit levels which in itself contributes to greenhouse gases.

“It is welcome that the Minister is taking a cautious approach to green taxes. His rebalancing of the VRT system where VRT rates will be focused on emission rates rather than on engine size is innovative and his announcement of continued support for the production of bio fuels is positive. However, if tax is to be more effectively used to fight global warming, greater emphasis needs to be placed on tax reductions to encourage environmental technology.”

Full commentary and analysis of Budget 2008 can be found at www.deloittebudget.ie.