The Government is to stall planned increases to fuel excise duty that were due to kick in at the start of next month.
A statement from Government Buildings issued on Friday confirmed that planned increases for September 1st and October 1st will not go ahead.
“In June the Government announced an extension of the temporary reductions to fuel excise and the National Oil Reserves Agency Levy and to avoid any cliff edge removal of supports, it set out a pathway to gradually restore rates to pre-reduction levels, starting from September 1st,” the Government statement says.
“However, it is clear that in the intervening period there has been a change in the global situation and as a consequence the cost of petrol and diesel for consumers.”
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“The Taoiseach, Tánaiste and Minister of State Seán Canney have kept in close contact in recent days and weeks and this morning agreed that the planned increases on September 1st and October 1st will not now go ahead.”
“The Government will agree the next steps next week.”
Five sources with knowledge of discussions said a recall of the Dáil was likely to give effect to the decision, with next Friday targeted as the sitting date.
It comes after Coalition backbenchers began to pressure the Government to extend the excise cuts - as did the Opposition.
There had also been a shift in tone from senior Government figures in recent days, with Minister for Finance and Tánaiste Simon Harris telling his backbenchers all options were on the table, while Minister for Enterprise Peter Burke said on Thursday a Dáil recall was under review.
On Thursday night, Sinn Féin leader Mary Lou McDonald wrote to Taoiseach Micheál Martin demanding that he recall the Dáil next week so it could vote to delay the first stage of the planned reversal of fuel excise duty cuts.
Minister of State at the Department of Transport Seán Canney said the Government would keep the restoration of the excise cuts under review so long as the geopolitical situation remained uncertain.
Speaking on RTÉ’s News at One he said the Dáil would be recalled for one day to secure approval of the decision to defer the planned partial restoration in September and October.
He could not say what would happen beyond then, but, if necessary, supports would be kept in place until there was “some levelling out and going back to normality”.
Asked about the cost for the State, he said it would depend on how long the reduction remains in place. He said he did not have numbers to hand but the sum involved would be pro rata of what had already been done. The Independent TD said it was one of largest fiscal interventions in any EU member state in response to the crisis.
He said the initial introduction was not a “kneejerk reaction” to fuel protests in April, saying he and Minister Darragh O’Brien had been having discussions about supports long before the protests began.
In April, fuel protests brought parts of the country to a standstill and resulted in the Government announcing a support package worth about €750 million. At the time, the Government increased temporary fuel excise cuts to 32c on a litre of diesel and 27c for petrol, but these reductions were due to be unwound on a phased basis between September and December.
From September 1st, 9 cent was set be added to a litre of petrol and 10 cent was due to be added to a litre of diesel. Further increases were expected at the start of October, November and December.
The Dáil was scheduled to resume following the summer recess on September 16th.
Labour finance spokesman Ged Nash said the Dáil recall “was as predictable as it was inevitable, with Government representatives more or less signalling this move with a change of tone in recent days.
“It comes as no surprise and brings this sham fight to an early close.
“Delaying excise duty restoration for a few weeks is all well and good, but in no way does it make up for Fine Fáil and Fine Gael’s gaslighting of PAYE workers this year, choosing as they did in last year’s budget to instead use the tax space to favour the hospitality sector. Working people have been left behind and are living with the consequences of this decision since January 1st.”
Fuel industry lobby Fuels for Ireland welcomed the decision to stall increases, saying it ”averts an immediate risk of pushing diesel prices above €2 per litre and triggering renewed fuel protests".
Its chief executive Kevin McPartlan said: “Today’s decision addresses the immediate problem, but it does not address the fundamental weakness in Ireland’s approach to fuel pricing.
“Once again, we have responded to an international oil-price shock with a last-minute change in taxation policy. Taxes are cut when a crisis becomes politically unbearable, a timetable is established for putting them back, international circumstances change and then Government has to scramble to change course.
“That is not a strategy.”
