Dáil Éireann Debate, Wednesday - 13 July 2022
164. Deputy Ged Nash asked the Minister for Finance if he will provide a costing pathway with the first-year yield for equalisation of diesel and petrol excise rates over four years in tabular form; and if he will make a statement on the matter. [38672/22]
View answerMineral oil tax (MOT) which comprises a carbon and non-carbon component is applied to auto diesel and petrol. As the Deputy will be aware, I introduced temporary reductions on the non carbon component of MOT applying to auto diesel and petrol earlier this year. These reductions are legislated to apply until 11 October 2022. The current rates of MOT applying to auto diesel and petrol are set out in the table below. The table also includes the MOT rates that would apply had the temporary cuts not been introduced.
|
Product |
MOT non Carbon Component (per 1000 Litres) |
MOT Carbon Component (per 1000 Litres) |
Mineral Oil Tax (per 1000 Litres) |
|
Petrol (reduced rate) |
€371.11 |
€94.87 |
€465.98 |
|
Petrol (without reduction) |
€541.84 |
€94.87 |
€636.71 |
|
Auto diesel (reduced rate) |
€295.64 |
€109.74 |
€405.38 |
|
Auto diesel (without reduction) |
€425.72 |
€109.74 |
€535.46 |
I assume that the Deputy is referring to the difference in the non carbon component of MOT between petrol and diesel which applies in ordinary circumstances (without the reduction), commonly referred to as the Diesel Excise Gap. This excise gap amounts to 11.6 cents per litre. Increasing the non carbon charge on diesel by 3 cents annually with a final increase of 2.612 cents in 2026 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 2026.
Excise Pathway to Equalisation by 2026 (by adding 3 cent annually until 2025 and 2.612 cent in 2026)
Petrol (Cent per Litre) Diesel (Cent per Litre)
|
MOT Non Carbon Component |
MOT Carbon Component |
Total MOT |
Carbon Tax Rate €/TCO2 |
Year |
MOT Non Carbon Component |
MOT Carbon Component |
Total MOT |
|
54.184 |
9.487 |
63.671 |
41 |
2022 |
42.572 |
10.974 |
53.546 |
|
54.184 |
11.223 |
65.407 |
48.5 |
2023 |
45.572 |
12.981 |
58.553 |
|
54.184 |
12.959 |
67.143 |
56 |
2024 |
48.572 |
14.989 |
63.561 |
|
54.184 |
14.694 |
68.878 |
63.5 |
2025 |
51.572 |
16.996 |
68.568 |
|
54.184 |
16.43 |
70.614 |
71 |
2026 |
54.184 |
19.004 |
73.188 |
The ready reckoner which can be accessed at the website address below, indicates that a 3 cent increase in the MOT rate on auto diesel would yield €85 million in a full year.
www.revenue.ie/en/corporate/documents/statistics/ready-reckoner.pdf.
