Dáil Éireann Debate, Tuesday - 27 July 2021
355. Deputy Ged Nash asked the Minister for Finance if a costing pathway with first year yield for equalisation of diesel and petrol excise rates over four years in tabular form will be provided; and if he will make a statement on the matter. [39913/21]
View answerMineral oil tax (MOT) which comprises a carbon and non-carbon component is applied to auto diesel and petrol. There is a lower non carbon component charge applied to auto diesel. The non-carbon charge applied to auto diesel is 42.572 cents per litre while the equivalent charge on petrol is 54.184. As diesel emits more carbon dioxide when combusted, the application of the carbon tax results in a higher carbon charge on auto diesel; the carbon charge is 7.752 cents per litre of petrol and 8.966 cents per litre of diesel.
The overall rate of MOT (carbon and non-carbon charge combined) is 61.936 for petrol and 51.538 for auto diesel.
The difference in the non-carbon charge, commonly referred to as an Excise Gap, is 11.6 cents. Increasing the charge on diesel by 3 cents annually would equalise the rates over a four year period as set out in the table below. It should be noted that as per the trajectory of carbon tax rate increases legislated for in Finance Act 2020, the carbon component charge of MOT will increase annually out to 2030. The pathway below includes the impact of the carbon tax rate increases which results in a higher overall rate of MOT applied to auto diesel in this scenario by 2025.
Excise Pathway to Equalisation by 2025 (by adding 3 cent annually)
Petrol (cent per litre)
Diesel (cent per litre)
|
Non Carbon Charge |
Carbon Charge |
Total MOT |
Carbon Tax Rate (€/t CO2) |
Year |
Non Carbon Charge |
Carbon Charge |
Total MOT |
|
54.184 |
7.752 |
61.936 |
33.50 |
2021 |
42.572 |
8.966 |
51.538 |
|
54.184 |
9.487 |
63.671 |
41.00 |
2022 |
45.572 |
10.974 |
56.546 |
|
54.184 |
11.223 |
65.407 |
48.50 |
2023 |
48.572 |
12.981 |
61.553 |
|
54.184 |
12.959 |
67.143 |
56.00 |
2024 |
51.572 |
14.989 |
66.561 |
|
54.184 |
14.694 |
68.878 |
63.50 |
2025 |
54.572 |
16.996 |
71.568 |
The ready reckoner which can be accessed at the website address below, indicates that a 3 cent increase in the rate of auto diesel would yield €83 million in a full year.
https://www.revenue.ie/en/corporate/documents/statistics/ready-reckoner.pdf
