“Bad for workers and bad for sustainability” – Union criticizes “perverse” tax increase for company cars

The government has been accused of “greenwashing tax robbery” after thousands of people who use company cars for work were hit by a massive increase in the taxes they pay for using the vehicles.

The changes that came into effect this month mean that the in-kind benefits tax (Bik) has more than doubled for those who get a vehicle provided by their employer because they need to travel for work.

The Unite union has criticized the new Bik rules, saying they would result in employees who use company cars to work having to pay hundreds of euros in taxes. It urged the government to immediately reverse the changes.

The government has said the changes are needed to strengthen the environmental justification behind taxing company cars.

The changes mean the lower a vehicle’s CO2 emissions, the lower the bike rate it will put on.

According to industry experts, around 150,000 company cars are on Irish roads.

Under the new rule, starting this month, the amount taxable as a Bik will be determined by the original market value (OMV) of a company car, annual business kilometers driven and new ranges based on CO2 emissions. The Bik flat rate for vans will be increased from 5 pieces to 8 pieces.

The bike regime has also changed for electric vehicles (EV). If the original market value (OMV) of the electric vehicle did not exceed €50,000 by the last year, the OMV was reduced by €50,000, practically to zero.

The new regulation provides for a reduction to €35,000 this year, €20,000 in 2024 and €10,000 in 2025.

The threshold will be gradually reduced to zero by 2026, with a new Bik rate of up to 22.5 percent for electric vehicles.

This is lower than the top Bik rate of 30 percent for internal combustion engine vehicles

But Unite Regional Officer Rob Kelly said phasing out the 0pc Bik on EVs will actively discourage their use.

“The result of the government’s perverse policy of phasing out Bik for electric vehicles will either impose significant additional costs on workers or discourage employers from converting their fleets to electric vehicles.

“At a time when government should be doing everything in its power to put money in people’s pockets, it’s clear that the new Bik rules have nothing to do with environmental sustainability, everything to do with a greenwashing Tax theft from hard-pressed workers. These changes are bad for workers and bad for the environment and must be phased out.”

Critics of the changes have warned they will result in less clean, modern hire cars being used and force staff to use less efficient petrol and diesel models.

Vehicle Leasing Association of Ireland President Michele Hanlon said the changes would prove so costly that company car drivers would give up their vehicles.

“Our members have been inundated with requests to return company cars because of the significant increase in biking this January,” she said.

And motorists who were in contact with this publication said the tax changes would prove punitive.

“Bik will cost me around €240 net per month, up from €140 in 2022, for a mid-size car I’ll never own,” said one business traveler.

Ms Hanlon said the Bik on a Hyundai Tucson Diesel, a popular choice for those who have a company car, would go from around €98 a month last year to €294 a month this year. This is an increase of 200 percent