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Dáil Éireann debate -
Thursday, 14 Feb 2002

Vol. 548 No. 4

Written Answers. - Environmental Policy.

John Bruton

Question:

125 Mr. J. Bruton asked the Minister for Finance if he accepts the decision in the national climate change strategy that fuel taxes should be set at appropriate levels to limit the rate of increase in overall fuel consumption; the proportions of the price represented by tax in respect of each category of fuel; and his views on whether this level is above or below the appropriate level required to limit the rate of increase in overall fuel consumption. [5132/02]

John Bruton

Question:

126 Mr. J. Bruton asked the Minister for Finance when the tax measures prioritising CO2, promised for 2002 in the national climate change strategy, will be introduced during 2002; the amount of taxation involved; and the way in which it will be applied to each sector (details supplied). [5133/02]

I propose to answer Questions Nos. 125 and 126 together.

The national climate change strategy provides a framework for achieving greenhouse gas emission reductions in the most efficient and equitable manner, while continuing to support economic growth and prepare Ireland for the more ambitious commitments that will be required after 2012.

The national climate change strategy states that measures will be taken to limit the rate of increase in overall fuel consumption. A switch to alternative, cleaner and more CO2 efficient fuels will also be encouraged. The strategy also states that it is intended to progressively reduce the incentive for foreign purchase of fuel in the State by 2008. This will be achieved by setting excise duty on transport fuel at appropriate levels. In the budget in December 2001, I announced increases in both petrol and auto diesel which took effect from budget night, with a further increase for auto diesel from 1 March 2002 for auto diesel with a higher sulphur content. This measure is designed to encourage a speedy changeover to the use of low sulphur diesel. It would not be appropriate for any Minister for Finance to indicate in advance any further tax measures that may be under consideration.

As I have said in the past, taxation can play a part in attaining environmental goals. However, as Minister for Finance, I am concerned to ensure that tax measures take into account the effect on Ireland's international competitiveness, particularly in relation to non-EU countries which compete with us, and which may have low taxes on energy. When framing policy, I am also concerned about the effect that the imposition of such taxes may have on the consumer price index, as well as the way in which such taxes could impact on the less well off members of our community.

As provided for in the national climate change strategy, a cross-departmental climate change team has been established to ensure the early implementation of the strategy. The team is chaired by the Department of the Environment and Local Government. A number of support groups have also been established to assist the team, including an economic analysis sub-group. I understand that its work is ongoing. Taxation issues arising from work of the climate change team are considered by the tax strategy group which is chaired by an official from my Department.

I am informed by the Revenue Commissioners that the following tabular statement shows the current average prices of the most popular oil products, showing the relevant percentage of tax.

Product

Measurement

Price (€)

Excise Duty

VAT

Total Tax

Tax as % of Price

Unleaded petrol

Litre

0.811

0.401

0.135

0.536

66.1%

Auto diesel

Litre

0.752

0.302

0.125

0.427

56.8%

Auto LPG

Litre

0.505

0.053

0.084

0.137

27.1%

Home Heating Diesel

1000 Litres

352.00

47.36

39.11

86.47

24.6%

Kerosene

1000 Litres

361.00

31.74

40.11

71.85

19.9%

LPG

25 lb cylinder

17.78

0.358

1.98

2.338

13.1%

Tax rates on fuels are monitored on a regular basis. I have no doubt that tax measures will affect the rate of consumption, although this is less certain where the tax content is already very high. Other factors also affect fuel consumption, notably economic growth and increasing use of private vehicles for transport (on which the tax element is also substantial).
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