The Vehicle Leasing Association of Ireland (VLAI) has published a report in which it advocates more tax breaks for businesses who want to adopt and operate a fleet of electric cars.
Claim back the VAT
Specifically, the VLAI is advocating, for the upcoming October Budget, that company car leases should be given a zero-VAT rate, and that companies should be able to claim back the VAT on purchases of electric cars. On top of that, the VLAI has echoed calls that it made last year for longer-term clarity on what the Benefit In Kind (BIK) taxation rules will be, saying that the Government needs to give assurances on those costs at least five years in advance to allow companies to plan properly.
"To achieve its emission reduction targets, the Government aims to have 181,000 electric vehicles on the road by 2025. VLAI has outlined a plan to the government in their pre-budget submission to gain momentum towards achieving this target. VLAI believes it can deliver an additional 25,000 electric vehicles in the next three years if the supports to businesses are granted" said Morgan McAndrew, president of the VLAI.
Uncertainty over taxation
The VLAI says that its research shows that uncertainty over the future costs of BIK taxation is cited as a reason not to choose an electric car by 50 per cent of company car buyers, and this despite BIK for electric vehicles having been given a zero-rate for the past several years. Nonetheless, the proposed adoption of a 22 per cent BIK rate for EVs in 2023 is putting many off making the move, according to the Association, which wants to see an eight per cent rate put in place instead.
The other reasons cited were range (22 per cent), infrastructure (12 per cent), and the grant for installing a home or work charger (15 per cent) - that last one in spite of the fact that the Government and the Sustainable Energy Authority (SEAI) has recently opened up the €600 home charger grant to include business buyers.
'Grey fleet'
The VLAI also says that there's been a significant move away from traditional company car models, to a 'grey fleet' - where employees supply and use their own car and get either a company car allowance or cash for fuel and other costs. That grey fleet, says the VLAI, is more likely to choose an internal combustion-engined model in order to keep purchase costs down, and that the up-front higher costs of an EV are a continuing barrier to mass-adoption for the business and user-chooser markets.
There should also be a 'trickle-down' effect for the used car market, if more businesses can be incentivised to switch to EVs for company cars - citing the fact that most company cars are renewed after 36 or 48 months, that would mean an increased supply of one-owner, full-service history electric vehicles for second-hand buyers.
"The time for change is now. With the support of the leasing industry, the Government has a much better chance of reaching its climate change objectives by offering VAT reclaim and a clear and consistent BIK taxation policy," said McAndrew.