asked the Minister for Finance if the excise element in the price of petrol will be lowered correspondingly with the increase in the VAT element in the case of any future increase in prices permitted to the petrol companies.
Ceisteanna—Questions. - Petrol Tax.
27.
The answer is "No".
I thank the Minister for his courteous and helpful reply. Would he not agree that there may be further substantial increases in petrol prices between now and the time of the next budget and that these increases would cause a further increase in the inflationary spiral? Therefore, would he not adjust the rate of VAT or excise duty to compensate for this factor?
The Deputy will appreciate that if there is a reduction in oil supplies there will be a consequential reduction in revenue. In the circumstances it would be unreasonable to contemplate that the Minister for Finance should bring about a further reduction in revenue by reducing the rate of VAT. I am sure the Deputy shares with everyone else a desire that the necessary expenditure of the Government would be financed.
Would the Minister not agree that this may be a case of killing the goose that lays the golden egg in that if we overtax petrol the distribution and other costs will increase to such an extent that the whole cost of living will be affected? Possibly there are other forms of taxation that might be re-examined in these circumstances.
The Deputy is suggesting that we should introduce a completely new principle in relation to VAT, that is, that as prices rise the rate of VAT should be reduced. Such a practice would not be permitted by the EEC. It would be contrary to the neutrality of taxation. While I sympathise with the objective of trying to compensate for increases in prices I must point out that, even if VAT were to be abolished in respect of oil, this would not compensate for the increases that are likely to occur having regard to the price increases indicated already.
I am not suggesting that VAT be abolished but that it be adjusted. Would the Minister not agree that the tax element in our petroleum products is greater than in other EEC countries?
We must pass on to the next question, Deputy.
I have no information to support the Deputy's suggestion but I would point out that not only is there this undesirability of loss of revenue as a consequence of the oil situation but also that the cost to the Government of operating Government vehicles will be increased so that the Government's costs would increase while revenue could decrease.