Coalition urged to follow Swedish move to cut car fuel taxes amid rising energy bills

Country reduced forecourt prices last month to help people with rising costs of living

The Government has been urged to follow Swedish moves to cut taxes on petrol and diesel as a means to help people struggling with the price of energy bills.

Last month, its parliament was asked to green light the move amid surging costs, saying it would reduce forecourt prices by 5 cent per litre, lowering the country’s tax take by about €225 million.

In 2020, the latest available data, the Irish State took in €1.8 billion in tax receipts from petrol and diesel. Over the last year, fuel price rises of a third were close to the highest ever recorded.

As the Government comes under increasing pressure to address rising living costs, the Irish Petrol Retailers Association (IPRA) said Ireland should consider to follow suit in cutting prices.


"We are seeing it [the effects of rising prices] on the forecourts with more drive-offs evident and consumers buying a specific amount of fuel rather than filling the tank," said spokesman David Blevings.

“Unfortunately, retailers have no control over increasing global oil costs and must pass these increases on to consumers or face going out of business.”

The Government has already moved to help homeowners with escalating domestic energy bills. The Department of Finance did not respond to requests for comment on the possibility of reducing fuel tax.

Economic turnarounds

Forecourt prices rise in sync with crude oil which, the IPRA has noted, reached $85 (€74) per barrel for Brent crude last November, an increase of more than 50 per cent since last January.

Several causes are cited including a cutback in production from OPEC countries (Organisation of the Petroleum Exporting Countries) and Russia, at the same time as global economies undertake rapid economic turnarounds from the global Covid-19 pandemic.

Monthly data from the AA shows that in January, petrol in Ireland cost on average about 175.5 cent per litre, and diesel about 166.1 cent. However, those prices before tax were 77.912 and 81.134 cent respectively. As of January 31st the average price of oil per barrel was $87.58 (€76.45).

In Ireland, excise is added to the sale of mineral oil – a fixed amount charged per litre which does not change even as prices fluctuate.

The tax rate for petrol is currently €636.71 per 1,000 litres and €535.46 for diesel. Of the excise charged in 2020 (which does not take VAT into account), €1.34 billion applied to diesel and €425 million to petrol, including, in each case, €212.5 million and €46 million in carbon taxes.

A Revenue spokeswoman explained that the Department of Finance introduced legislative amendments in 2021 to provide for a temporary reduction in tax rates for both petrol and diesel.

“The decrease is scheduled to come into effect from April 1st this year and will run until October 12th 2022,” she said.

“This temporary rate reduction of 1 cent per litre was introduced to partially offset the expected increase in fuel costs as a result of the proposed increase in the biofuel obligation for transport fuels.”

That will be matched by a reduction in the National Oil Reserves Agency levy which together will offset the estimated impact of the biofuels increase on the retail price of auto fuels, she said.

Mark Hilliard

Mark Hilliard

Mark Hilliard is a reporter with The Irish Times