Ministers fear fuel tax cuts will be wiped out by soaring price rises

Dáil votes for excise duty cut but Opposition TDs say reductions are not enough

The Dáil voted on Wednesday night to approve the Government’s proposal to cut excise on petrol and diesel, but Ministers and senior officials fear that the tax reductions will be wiped out by soaring price rises.

Opposition TDs complained that the reductions – by 20 cent a litre for petrol and 15 cent for diesel – were not enough, while the Minister for Finance Paschal Donohoe said that the Government "cannot protect citizens and businesses from the entire cost impact. We are experiencing the consequences of a war".

The cuts in excise, which will expire in August, will cost the exchequer €320 million. Petrol and diesel prices in Ireland are at their highest level on record with the current average just under €2 per litre. Average prices this week spread over 12 months will cost motorists over €1,000 more than in 2020.

Fuels For Ireland, the representative body for the fuel industry in Ireland also welcomed the excise cut while echoing concerns that it would not go far enough.The measures will save the average motorist €240 per year but the AA said it would not be enough to protect motorists from the worst impact of rising fuel prices.

Taoiseach Micheál Martin condemned reports of price fixing on fuel prices at a time of war as “morally reprehensible”.

Speaking at his party’s parliamentary meeting, he said that “any exploration of a barbaric war such as this is morally reprehensible.”

Energy security

The Taoiseach suggested that the Government wished to cut fuel prices by more but was constrained by doing so by EU laws.He also briefed colleagues that energy security was now a serious issue in Ireland.The serious disturbance to the grain market will also have a marked, and worrying, impact domestically.

There were calls from Fine Gael backbenchers at their parliamentary party meeting to stall planned increases to the carbon tax, due to start in May – with excise cuts dismissed as "too little, too late".

Senator Tim Lombard and Carlow-Kilkenny TD John Paul Phelan suggested the increase should not go ahead as planned and as outlined in budget 2022 last October, with the meeting also hearing that more should be done on excise duty.

Annual increases to the carbon budget are a key part of the Coalition’s climate policy, and are included in the programme for government, which envisages a level of €100 per tonne of C02 by 2030, with legally mandated rises of €7.50 per year.

Meanwhile, the Government is set to approve a package of supports before the end of the month for farmers to grow feed and fodder. It’s understood the package is likely to amount to tens of millions of euro, with farmers facing multiple challenges which are set to drive up costs and have a knock on effect for consumers.

Fertiliser

A National Fodder and Food Security Committee was formed on Tuesday night due to the threat to raw materials and fertiliser arising from the Russian invasion of Ukraine.

Minister for Public Expenditure Michael McGrath said the exchequer impact of providing services and supports to tens of thousands of refugees who are anticipated to come to Ireland from Ukraine will run to hundreds of millions of euro. He said, however, that he expects overall State expenditure will be contained under the budget day ceiling of €87.6 billion.