Diesel drivers could face tax increase of €140 a year

Government warned not to penalise drivers who were encouraged to switch from petrol

Irish motorists who drive diesel cars could be hit with an annual tax increase of almost €140 if the Government moves to bring car fuel prices in line by increasing the excise on diesel.

Consumer groups and the AA have warned against any such measures saying that to penalise diesel drivers now after spending the previous decade encouraging people to switch from petrol to diesel engines would be an “act of bad faith” on the Government’s part.

Almost 10 years ago, motorists were encouraged to switch to diesel after the government of the day overhauled VRT and motor tax rules moving from one based on engine capacity to one based on CO2 emissions.

The tax incentives and a 10 cent excise differential between the two fuels worked, and the driving balance was tipped, with the percentage of petrol cars falling from 70 per cent in 2007 to about 30 per cent today with diesel cars travelling in the opposite direction.


Serious blow

The popularity of diesel engines suffered a serious blow after the Volkswagen emission testing scandal of 2015 and since then demand has fallen across Europe with many states taking measures against diesel cars.

The engine remains popular in the Republic but that could change rapidly if excise changes are rolled out. The average motorist drives 16,000km every year using about one litre of fuel for every 12 km travelled. Increasing the price of a litre of diesel by 10 cent to close the price gap between it and petrol would add about €140 on to the annual cost of driving for diesel motorists.

Long-standing advocate and policy adviser to the Consumer Association of Ireland Dermott Jewell said such a move would be a fresh example of “car owners getting a raw deal” and he warned that drivers would exact revenge in the next election.

“There was a huge push to incentivise Irish motorists to choose diesel and were all told it was the right thing to do. If that message is suddenly reversed, it will not sit well with many. They know their voices won’t be heard, at least until the next general election,” he warned.

His concerns were echoed by director of consumer affairs with the AA Conor Faughnan. "Diesel cars today are much cleaner than those sold 10 years ago and all new cars sold now would have been classified as ultra low emission in 2008. That is the reality," he said.

He called on the Government to be “fair”, pointing out the reason so many people had bought diesel cars was because “the Government asked them to”.

He said any diesel tax increases would be a “blunt instrument” and would have a “minimal impact” on the amount of fuel consumed. “It won’t change how far your home is from your office and all it will do is take money out of people’s pockets. It will also be bad in the long term because it will be an act of bad faith on the Government’s part. People were told to switch from petrol to diesel and they did, and if they are now penalised for that they will remember it when encouraged to switch to hybrid or electric cars.”

He suggested the introduction of a scrappage scheme for people switching to hybrids and said if the Government wanted to close the 10-12 cent gap between the price of a litre of diesel and a litre of petrol, “it can do that by reducing the price of petrol, they don’t have to increase the price of diesel to achieve that effect”.

Conor Pope

Conor Pope

Conor Pope is Consumer Affairs Correspondent, Pricewatch Editor and cohost of the In the News podcast