A phased approach may be taken to reversing fuel excise duty cuts, senior Government figures have indicated, with a decision due next week regarding the future of measures introduced when prices spiked during the Iran war.
Excise reductions of 32 cent a litre on diesel and 27 cent for petrol are due to expire at the end of next month, but some level of a cut is likely to remain and the Coalition is considering an unwinding of the measures over time.
Taoiseach Micheál Martin on Friday said the Cabinet would make a decision on the issue on Tuesday after Coalition leaders meet to discuss the matter on Monday evening.
He said this would allow “anything that is required legislatively” to be done in good time before the Dáil recess.
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Martin said fuel prices were coming down, but he was keen to avoid “any cliff edge” in relation to the excise cuts.
Minister for Finance Simon Harris offered a similar view on Thursday, signalling a possible tapering off to ensure no “immediate cliff-edge” at the end of July.
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He said the Government is conscious of “volatility” as a result of the war in the Middle East and the “stop-start nature” of talks on a settlement between the US and Iran.
“It looks a more positive trajectory now in terms of the Strait of Hormuz opening up and in terms of a more settled period ahead in respect of prices around fossil fuels.”
The Taoiseach said “companies also have a role” with global prices coming down, and that he would like to see this reflected in their approach.
“But that volatility will mean that Government won’t be taking a sort of a one-decision-type approach to this.”
Martin said the Government wanted there to be “a reasonable, stable lead” into October’s budget. He said there would be “more fundamental” decisions to make on the cost of living, but also in relation to childcare, taxation and supports for people with disabilities.
He was also asked about remarks by Dónal O’Shea of the Economic and Social Research Institute, who said he expected energy price inflation would drive price growth in other areas, including food costs, later in the year.
In response, Martin said the State had found a way through “shocks to the world economic system” in recent years, including the Covid-19 pandemic, Russia’s invasion of Ukraine, US tariffs and the war in the Middle East.
“Ireland has been resilient in the face of those shocks but they do impact on us. And obviously we will frame the budget in the context of protecting people, endeavouring to reduce pressures on families.”
He said Minister for Social Protection Dara Calleary had some “significant proposals” for the disability sector, with work ongoing in advance of the budget regarding a cost-of-disability payment to reflect the additional costs faced.
Meanwhile, Minister for Foreign Affairs Helen McEntee said fuel prices had “thankfully” started to drop and that a €750 million package had been provided “to support those most in need”.
She said there is “a yearly budget and we need to try and stick to that as much as possible”.
“One-off payments, while they’re essential and they do support people at that time of need”, are not the best course of action, she said, adding that there should be a focus in Government on making “changes to the overall structures that benefit people” in the longer term.
