Dáil Éireann Debate, Wednesday - 9 July 2008
219 Deputy Tom Hayes asked the Minister for Transport the measures taken to liaise with the Department of Finance to organise the promised alternative to the fuel rebate for bus operators; if the increased cost of diesel and petrol have been taken into account when considering this issue; and if he will make a statement on the matter. [27987/08]
View answer220 Deputy John Deasy asked the Minister for Transport the alternative scheme which was to be devised to replace the fuel rebate scheme that was available to passenger transport services; and if he will make a statement on the matter. [28004/08]
View answerI propose to take Questions Nos. 219 and 220 together.
The EU Energy Tax Directive incorporated special derogations which allowed specific excise duty reliefs to be applied in a number of Member States below the EU minimum duty rate. In the case of public transport services under my responsibility, these derogations included reduced rates to apply to fuel used for scheduled bus services. Scheduled bus services comprise bus passenger services provided by Bus Átha Cliath, Bus Éireann, private operators in accordance with bus route licences under the 1932 Road Transport Act and holders of Authorisations pursuant to European Council Regulation 684/92 as amended. The position in regard to the school transport sector is a matter for my colleague, the Minister for Education and Science.
While these derogations expired on 31 December 2006, Ireland, along with other Member States, sought retention of its derogations beyond that date. However the European Commission, which is the deciding authority, has to date refused all such requests. The Finance Act 2008 provided the basis for the removal of these excise duty reliefs with effect from 1 November 2008.
My Department, in conjunction with the Department of Finance and other Departments, has been exploring whether alternative support mechanisms could be appropriate and could be done in a manner compatible with EU State Aid and other legal requirements. While my Department is in discussion with the Department of Finance on these issues, it is necessary to stress that, despite claims being made otherwise, introducing an alternative suitable mechanism is not a straightforward matter in the current economic climate.
There has been extensive contact and correspondence with the Department of Finance on this issue. My colleague the Minister for Finance has already stated that our overall response to the increase in fuel prices is, as was adopted at the recent Ecofin and European Council meetings, that distortionary fiscal and other policy interventions should be avoided as they prevent the necessary adjustments by economic agents. Accordingly, I don't envisage any approval from the Department of Finance for a replacement scheme in the current economic circumstances.
