Thursday, 17 October 2019

Questions (81)

Marc MacSharry

Question:

81. Deputy Marc MacSharry asked the Minister for Finance the way in which the proposed new diesel rebate scheme for hauliers will operate, with reference to changes to the price floor, price ceiling and maximum rebate associated with this scheme. [42663/19]

View answer

Written answers (Question to Finance)

The Diesel Rebate Scheme (DRS) was introduced in 2013 offering a partial refund to qualifying road operators on the excise paid on diesel when the retail price reaches €1.00 (Vat exclusive) or above. There is a maximum rebate of 7.5 cents per litre when the retail price is €1.25 (Vat exclusive) or above.  

In recognition of the challenges facing the road haulage sector due to the uncertainty surrounding Brexit, I announced in my Budget 2020 speech that the DRS is being enhanced. The detail of this is set out in the Finance Bill which is being published today. In brief, the price floor of €1.00 (Vat exclusive) will remain the same; the marginal rebate rate will double at a price point of €1.07 or above; the maximum rebate amount will remain at 7.5 cents per litre; and the amended DRS will apply to fuel purchased by qualifying operators from 1st January 2020.

This represents a significant enhancement of the terms of the DRS. By way of example, the current average price of a litre of diesel is €1.093 (Vat exclusive), which if used as the average price under the current DRS would entitle qualifying operators to a rebate of 2.8c per litre. Under the enhanced DRS, qualifying operators would be entitled to a rebate of 4.4c if an average per litre price of €1.109 (Vat exclusive) were to be used as the basis for calculating the rebate. In other words, in the example outlined above, an additional 1.6c to the average price of a litre of diesel would be matched by the additional rebate amount. More generally, at a price point of €1.16 (Vat exclusive), the rebate amount under the enhanced DRS is 7.5c per litre which is 2.7c per litre more than the rebate amount that would be paid under the current DRS.      

I appreciate that this scheme is a fossil fuel subsidy which the ESRI has found is directly increasing CO2 emissions. However, I consider, on balance, that the specific Brexit challenges faced by hauliers justifies this enhancement. This is intended as a temporary support measure, to be reviewed as part of the annual budgetary process.