Dáil Éireann Debate, Wednesday - 15 June 2022
14. Deputy Peter Fitzpatrick asked the Minister for Finance if the Government has plans to reduce the taxation on petrol and diesel in order to ease the financial burden on both personal and commercial road users; and if he will make a statement on the matter. [31353/22]
View answerIreland’s taxation of fuel is governed by European Union law as set out in Directive 2003/96/EC, commonly known as the Energy Tax Directive (ETD). The ETD prescribes minimum tax rates for fuel with which all Member States must comply. ETD provisions on mineral oils are transposed into national law in Finance Act 1999 (as amended). Finance Act 1999 provides for the application of excise duty, in the form of Mineral Oil Tax (MOT), to specified mineral oils, such as petrol, diesel, and kerosene, that are used as motor or heating fuels.
MOT is comprised of a carbon component and a non-carbon component. The carbon component is commonly referred to as carbon tax and the non-carbon component is often referred to as “excise”, “fuel excise” or “fuel duty”. In complying with ETD minimum rates, total MOT rates are taken into account.
In response to the current fuel crisis, I introduced a significant reduction in the MOT rate applying to petrol from 10 March this year. Inclusive of VAT, the reduction in the MOT rate amounts to 20 cents per litre. In addition to this rate change, I also brought forward legislation in Finance Act 2021 to provide for a temporary reduction of 1 cent per litre inclusive of VAT to MOT on petrol. This reduction came into effect on 1 April. I took this step to partially offset the expected rise in fuel costs arising from an increase in the Biofuel Obligation for transport fuels proposed by my colleague the Minister for Transport. Both rate cuts will remain in place until 11 October this year. MOT rates on petrol since Budget night last year are summarised in the table below, along with comparisons with the ETD minimum rate.
|
Petrol rates/1,000L from |
MOT non-carbon |
MOT carbon |
Total MOT |
ETD minimum |
MOT > ETD minimum by |
|
13 October 2021 |
€541.84 |
€94.87 |
€636.71 |
€359.00 |
€277.71 |
|
10 March 2022 |
€379.24 |
€94.87 |
€474.11 |
€359.00 |
€115.11 |
|
1 April 2022 |
€371.11 |
€94.87 |
€465.98 |
€359.00 |
€106.98 |
Regarding MOT on auto-diesel, I introduced a rate reduction of 15 cents inclusive of VAT from 10 March. A further reduction of 1 cent per litre inclusive of VAT was applied from 1 April. MOT rates on auto-diesel from October 13 last year to date are summarised in the table below, along with comparisons with the ETD minimum rate. Current rates will remain in place until 11 October this year.
|
Auto-diesel rates/1,000L from |
MOT non-carbon |
MOT carbon |
Total MOT |
Effective MOT incl. DRS |
ETD minimum |
MOT rate > ETD min. by |
Effective MOT > ETD minimum by |
|
13 October 2021 |
€425.72 |
€109.74 |
€535.46 |
€460.46 |
€330.00 |
€205.46 |
€130.46 |
|
10 March 2022 |
€303.77 |
€109.74 |
€413.51 |
€338.51 |
€330.00 |
€83.51 |
€8.51 |
|
1 April 2022 |
€295.64 |
€109.74 |
€405.38 |
€330.38 |
€330.00 |
€75.38 |
€0.38 |
The Diesel Rebate Scheme (DRS) was introduced in 2013 with the aim of providing support to road haulage and bus transport operators when the retail price of diesel is relatively high. The DRS operates on a sliding scale basis, whereby a partial rebate of MOT is available when the retail price of diesel exceeds €1.00 per litre excluding VAT. The repayment rate increases gradually as the retail price increases, up to a maximum repayment rate of 7.5 cents per litre/€75.00 per 1,000 litres. At current retail prices the repayment rate is at this maximum.
It is important to note that the effective MOT rate on auto-diesel must be considered in ensuring compliance with the ETD. The effective rate includes the maximum MOT rate repayable under the Diesel Rebate Scheme (DRS), currently €75.00 per 1,000 litres. The current MOT rate on auto-diesel is €405.38 per 1,000 litres, which is €75.38 above the ETD minimum. However, when the DRS is taken into account, the effective MOT rate is €0.38 per 1,000 litres, or 0.038 cents per litre, above the ETD minimum, meaning that any material reduction in the effective MOT rate would be incompatible with EU law.
