Minister for Finance Brian Lenihan announced an 8 cent a litre increase in petrol prices, which pushes petrol once again ahead of diesel in terms of cost at the pumps.

This will further push motorists in the direction of diesel engines, along with the CO2 benefits.

Annual motor tax rates also took a hit. The Finance Minister proposed annual motor increases are 4% for cars below 2.5 litres and CO2 bands A to D, and 5 % for cars above the 2.5 litre threshold and CO2 bands E, F and G. Road tax rates for goods and all other vehicles will also increase by 4% with no increase for electric vehicles.

This means that car tax under the new CO2 system will increase between €4 and €100 at the top end of the scale.

Cars taxed on the older cc system will rise by between €7 and €75 depending on the engine size again between 4 and 5% of an increase.

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

The Government hopes to get an additional €40 million from motorist in 2009 as a result of these changes.

Drivers who drive to work in cities will also be penalized with a new €200 annual levy charged to employees whose employer provides them with a parking space.

This new levy applies to the employee rather than the parking space and that means that those sharing spaces will each have to pay the €200 fee.

This new levy would apply to civil servants and members of the Oireachtas, as well as to ordinary citizens.

The urban areas involved will be the centres of Dublin, Cork, Galway and Limerick.

To coincide with this there is a new benefit-in-kind exemption of up to €1,000 for employees who cycle to work. So it’s on your bike rather than behind the wheel from now on!

The Minister for Finance also announced changes to the benefit-in-kind system.

The system is currently charged at 30% of the value of the car. Under a new system, the benefit in kind will be linked to the cars’ level of CO2 emissions.

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