The excise rate for auto-diesel prior to budget 2003 was well below the EU average, the Irish rate was 30c per litre compared with the EU average of 35c per litre. Even after this increase, the Irish rate will only rank 7th in the EU, at 33c per litre. Moreover, the price of diesel had in fact decreased in real terms by 14% between 1993 and 2002, while the tax content had decreased by 17.3% in real terms, pre-budget.
At present, under European Union law, the rate applicable to substitute fuel is the same as that applicable to auto-diesel. Substitute fuels are products such as biofuels that are manufactured, produced, and intended for use or used as motor fuel. There are proposals relating to energy taxation currently at an advanced stage of discussion in the EU Council. One of the provisions in the proposal would allow member states to grant relief or exemptions from excise duty on biofuels – assuming final agreement on the proposals. Such relief or exemption would be discretionary on the part of member states.