Government rules out cutting motor fuel tax

Fri, Aug 24, 2012, 01:00

THE GOVERNMENT has ruled out reducing excise duties on motor fuel despite calls from the Opposition to follow the French example of cutting taxes on petrol and diesel.

The price of petrol has risen above €1.70 in many petrol stations across the State, the highest levels seen in Ireland.

However, a spokeswoman for the Department of Finance said yesterday the Government could not reduce fuel taxes without introducing extra levies elsewhere.

French prime minister Jean-Marc Ayrault announced a temporary tax cut on oil products to lower fuel costs at the pumps in France on Wednesday. He said the move was a “unilateral measure to lower the state’s share” of revenue from fuel, which would be “modest and temporary”.

Fianna Fáil transport spokesman Timmy Dooley has called on the Government to follow the French example, saying it was “blindingly obvious” that something must be done to ease the burden on Irish motorists.

“If it is good enough for the French government to introduce temporary measures to halt the spiralling costs by lowering taxes, why can’t our Government do likewise?” Mr Dooley asked.

Irish motorists pay 23 per cent VAT on motor fuel, in addition to mineral oil tax and carbon tax of 58.8 cent per litre on petrol and 47.9 cent per litre on diesel.

A Fianna Fáil Bill published in April to cut the price of petrol and diesel by five cent a litre was rejected by the Government.

The spokeswoman for the Department of Finance said such a measure would cost the exchequer €178 million a year.

“The loss of this revenue would have a negative impact on the performance of our public finances, which is vital to our economic wellbeing and to our exiting the EU-IMF programme,” she said.

“As outlined at the time of the [Fianna Fáil] motion, taxes or excises cannot be reduced without introducing additional taxes or charges in other areas to replace the tax forgone.”

An AA Ireland survey of average petrol prices across the State last week revealed that Irish motorists were paying €1.631 per litre, but according to policy director Conor Faughnan, prices rose further this week.

“We were warning at the beginning of this week that prices could get to €1.70. We haven’t quite reached that on average yet, though there are plenty of places charging above this now,” he said.

The price of a barrel of crude oil rose to more than $116 yesterday, the highest rate since April.

Concerns over supply have been triggered by escalating conflicts in Syria and Yemen, as well as Iran’s dispute with the US and Europe over its nuclear programme.

Fuel prices in Ireland have also been affected by the declining strength of the euro, which is down 16.5 per cent since this time last year.

“It is possible, if the euro continues to weaken and oil prices continue to rise, that Irish petrol prices could go up even more,” Mr Faughnan said.