asked the Minister for Energy if his Department have any plans to reduce the price of petrol by recommending to the Minister for Finance the reduction in the level of excise and tax; the level of taxation in the gross price of a gallon of petrol; the estimated profit margin to the oil companies and retailers; and if he will make a statement on the matter.
Ceisteanna—Questions. Oral Answers. - Oil Prices.
12.
Price control on petroleum products is the responsibility of the Minister for Industry and Commerce while the Minister for Finance has responsibility for setting rates of excise duty and value added tax on such products. I do not propose to inform the House of discussions of a confidential nature between myself and other Ministers.
The current level of excise duty and value added tax on leaded petrol is 30.35 pence per litre and 25 per cent respectively. At a current retail price of 62.5 pence per litre — or £2.84 per gallon — excise and VAT together amount to 42.85 pence — or £1.95 per gallon — or 68.6 per cent of gross price.
I do not have official information on estimated profit margins enjoyed by either oil companies or retailers. The margin on petrol currently allowed to companies and retailers under the maximum price order is 3.97 pence and 3.38 pence per litre respectively. These permitted margins cover all overheads including profit.
Would the Minister not accept that the fixed excise which goes to make up most of the 68 per cent tax constitutes an enormous barrier to any price competition in this market between existing suppliers? Would he agree that it would be preferable that a large part of this exercise be made ad valorem in the same way as applies to tobacco duties?
Primarily these are matters for the Minister for Finance in the context of budgetary considerations. In these areas clearly it would be very desirable if there were financial scope to make adjustments.
This is change in the structure, not change in the level.
Would the Minister accept that the combination of VAT and excise duties on petrol — which comprise 70 per cent of its retail price at the pump — is an appallingly high level of taxation on a vital commodity? The Minister has said he does not have responsibility in this area. However, he is a member of the Government and certainly has collective responsibility as far as these matters are concerned. Rather than resort to the type of ad hoc, artificial arrangements that have obtained in the past couple of weeks — whereby the INPC are being forced to incur losses and an effective subsidy being given the consumer — would the Minister agree it would make a lot more sense for a reduction in VAT or excise duties on petrol to bring our costs in that sector more into line with those of our competitors elsewhere? Furthermore, would he not agree that, as far as the cost of petrol is concerned, we have reached the point of diminishing returns, with serious consequences for economic development generally?
If it were possible from a financial point of view to make downward adjustments these would naturally be very desirable. This is not a matter for the Minister for Energy but for the Minister for Finance——
Have you any views on it?
——in the light of the prevailing financial situation. I do not accept the description of the present arrangements as being ad hoc and undesirable. We have managed in a fairly difficult international climate to keep price rises to an absolute minimum against very considerable odds. The part of that burden which is being borne by the INPC can very well be adjusted as the price of oil lowers from now until the autumn. We clearly indicated at that time that we anticipated a drop in prices and our consideration of that has been justified in the light of international events.
May I ask the Minister if his reluctance to involve himself in this issue, despite the fact that he is Minister for Energy, arises from a certain amount of embarrassment on his part in view of the appalling outcome of the recent debacle where, at one stage, we had the Minister for Industry and Commerce saying that the Government would take over oil distribution in this country and within two weeks we find that he is giving an increase of 12p a gallon to the oil companies? Would the Minister also agree that this a remarkable state of affairs for a Minister for Energy to say that he has no hard information with regard to the profits of the multinational oil companies on the one hand when, on the other, he is compelling his own company — the Irish National Petroleum Company — to incur losses of £2 million to maintain an unreal price to the companies?
If the Deputy heard me correctly, I said I had no official information.
What does that mean?
Clearly there is information of a kind about but it does not fall into my particular sphere of responsibility. I can also assure the Deputy that I was in no way embarrassed by my covering the Minister for Industry and Commerce.
The Minister has a thick hide.
Deputy Austin Deasy is intervening.
I am not sure if we got an answer to that portion of the question which asked the estimated profit margin to the oil companies and retailers.
There is no official information.
The Minister must be aware of the outrage felt amongst petrol retailers at the reduction in their profit margins. They have represented to me that it is as much as 16 per cent of a reduction. Can the Minister verify or contradict that?
One would have to widen the whole scope of this question because there are different products, and a whole combination of discount rates. There is the question of whether the companies are linked up to the refinery. In relation to the first question, in the brief time available to me I do not think it would be proper to deal with a question of that serious import.
It is in the question.
It is also fair to say that many of the questions posed would seem to be the responsibility of another Minister.
What is the Minister for Energy about?
He is passing the buck.
I was never too good at that.