Dáil Éireann Debate, Thursday - 16 June 2022
5. Deputy Aengus Ó Snodaigh asked the Minister for Finance if he will consider reducing the rate of excise duty applicable to petrol and diesel to ensure that, as the price of fuel increases, Government income does not also increase at a cost to households, businesses, taxi drivers and hauliers in particular; and if he will make a statement on the matter. [31304/22]
Amharc ar fhreagra21. Deputy Jennifer Carroll MacNeill asked the Minister for Finance the estimated cost of reducing excise duty on petrol and diesel to date in 2022 that was originally introduced to help with the cost-of-living pressures; and if he will make a statement on the matter. [31017/22]
Amharc ar fhreagra23. Deputy Brendan Griffin asked the Minister for Finance if he will further review taxes on transportation fuel given the further price increases; the estimated income that has been raised from transport fuel taxes and excise to date in 2022; the way this compares with the same period in 2019, 2020 and 2021 and with the projected figures by his Department at budget time; and if he will make a statement on the matter. [31298/22]
Amharc ar fhreagra44. Deputy Matt Carthy asked the Minister for Finance the additional measures he intends to introduce to support workers who are impacted by soaring motor fuel costs. [31308/22]
Amharc ar fhreagra65. Deputy Cormac Devlin asked the Minister for Finance if he has any plans for a further extension of the timeline for the reduction in excise duties on petrol, diesel and marked gas oil; and if he will make a statement on the matter. [30070/22]
Amharc ar fhreagraThis question relates to the petrol and diesel crisis and the significant cost on households, businesses, taxi drivers and hauliers. Has the Minister for Finance considered reducing the rate of excise duty applicable to petrol and diesel in particular?
I propose to take Questions Nos. 5, 21, 23, 44 and 65 together.
I thank Deputy Ó Snodaigh for raising this question. As the House will be aware, excise duty is applied to fuels on a volumetric basis in the case of non-carbon charges and on the basis of carbon dioxide omissions in the case of carbon tax. As such, the revenue raised from excise duties does not increase in light of increased prices, as may be the case with the ad valorem application of taxation.
The Government is aware of the impact of rising fuel prices on households and businesses. These trends are driven by global factors, the single largest of which is what I call the Putin war in Ukraine, which affects everything underpinning our discussion today. Without that war, we would not be having this discussion. Yes, prices were increasing due to Covid. There were supply chain issues across the world's economy as well as pent-up savings, with people wanting to spend more. This has led to inflationary pressures. After two years of lower activity during Covid, there has been a surge in activity, which is increasing inflation.
The key issue people are concerned about is the Putin war. Most of the scenarios being produced by the ESRI and everyone else are based on what is happening in Ukraine and how it affects fuel. While we do not directly import fuel from Russia, other EU countries do. If they stop doing so, it will have a significant impact on the markets where we purchase fuel and limit other countries in where they source their fuel, adding to our inflationary pressures.
A key driver in the inflation in wholesale energy prices has been Ireland's rebound, which has been quick and strong as a small, open economy. More recently, the Putin war has been a significant factor.
I understand the Minister of State's point, but that does not solve the problem for those involved in farming, transport or haulage or for the ordinary worker who has to get to work and cannot rely on public transport because there is none in the area or it is not feasible. Their costs are going up. It is reckoned that, if inflation continues as it has been, prices will increase by between €750 and €1,000 per year. The Minister of State is correct about prices fluctuating, but they do not fluctuate to that degree. The Ukraine crisis is being used as an excuse to explain away the current rise, but the increases in petrol and diesel prices far predated the war in Ukraine.
People take temporary measures in an emergency, and this is an emergency. We took temporary measures for the past year or two during the pandemic. What emergency measures are going to be taken to ensure the increase in the cost of fuel is not passed on to those who cannot afford it?
I apologise for missing the start of the question. The specific question to the Minister of State is on soaring fuel prices and the impact they are having on workers and families. The Government introduced minimal reductions in excise measures in March and it has done nothing since in respect of the huge cost and burden of fuel prices on workers and families. We are four weeks away from recess and if the Government does not introduce a measure within those four weeks, we will be looking at the end of September or October. I dread to think what fuel prices will be at that stage. The implications of further increases in fuel prices for so many workers and families do not bear thinking about because they are already stretched to the limit. There is also an additional burden that the increase in fuel prices brings because everything is transported and when those transport costs increase so does the price of everything else, including foodstuffs. Will the Minister of State introduce measures that will help ease that burden before the summer recess?
On fuel excise, a package of measures, to the value of €320 million, was introduced on 10 March. I know the Deputy said that was little or nothing but €320 million is a substantial figure and that was only done quite recently. That reduced the VAT, inclusive of excise duty on petrol and diesel, by 20 cent and 15 cent per litre, respectively. These reductions mitigate the cost of a fill of a 60-litre tank by €12 for petrol and €9 for diesel. We know that as we head back into the next winter season, when it comes to the cost of home heating oil, those areas will become more important. There is not quite the same call on those resources during the summer.
However, I have made the following point already and the Deputy will also have heard about the ESRI report this morning. That contains food for thought for the Government for the forthcoming budget and preparation for same. I respect what the ESRI says even if I do not always agree with it. I often agree with what it says and the ESRI has talked about the measures we have introduced, including the precise ones the Deputy is proposing. I am not taking the following quote selectively; rather it is a big quote in bold print in its press statement:
If the objective is to protect those most affected by rising energy prices, cutting indirect taxes on energy – like VAT, fuel duty, or the carbon tax – is a poorly targeted response.
That is the case because it has run the figures and it says that wealthier and better off people on higher incomes are benefiting disproportionately and in a positive way from its point of view, rather than the people who need it more. The ESRI goes on to state in its press release:
Instead, increases to welfare payments, the fuel allowance, and even lump-sum payments like the household electricity credit are better targeted at those most affected by energy inflation
That is because energy inflation affects people on lower incomes more than people on higher incomes. Everyone got the €200 but proportionately, the value of that €200 was far more for a lower income household than for a more wealthy one. The ESRI is saying that some of these measures are more targeted because they help people on lower incomes to a much greater extent. Some parties in the House oppose this completely and think the solution to everything is solely in petrol and diesel. These other measures we have taken to reduce the cost on households and the cost of public transport also contribute and have to be taken into consideration.
I do not know whether the Government understands how stretched businesses are and how the first reaction for any business if it has an increased output is to pass that increase on to the customer. That includes the less well-off and those who are dependent on local shops and on getting to school. There has to be some measure to try to discourage businesses, hauliers, taxi drivers and any type of transport business in this country from passing on to the customer the increases they are being forced to pay because of the price of fuel. One of the ways we can do that is through taxation, rebates, reducing the excise duty and measures such as that. At this stage there has been a huge jump since March and March is what the Minister of State quoted. There has been an increase of 20 cent per litre since March. Not a thing has been done and it is likely to continue in the coming weeks and months.
Let us be clear that Sinn Féin has put forward a package of measures that are required to ease the burden of the cost-of-living crisis that so many are facing, including specific directed measures that would ensure social welfare recipients and people on lower incomes receive targeted supports. We also need to recognise the lived realities of hundreds of thousands of families. I will never forget the telephone conversation I had with a person who told me that on their way home from work they have to hold their breath while looking at the petrol gauge and cannot begin to think about how they will drive to work the next day, without even considering whether they will purchase a lunch for themselves as that is not an option. I asked the Minister of State a specific question. Will he introduce measures to support people in that position between now and the summer? He did not respond to that question so I will ask him again. Will the Government do a single thing to help those specific people between now and the summer recess? If it does not, those people will be waiting at least six months before this Government intervenes.
The Deputy's question is specific about the reduction in excise duties for petrol, diesel and marked gas oil. I know he said he has concerns about other issues and people on lower incomes and social welfare payments who might not be affected to the same extent as people trying to get to and from work. The question he asked was specifically on that issue and I have been confining my remarks to the specific question that was raised and, in particular, to what the ESRI said about that this morning, which I have quoted. The ESRI has talked about these issues. The European tax directive minimum rate for petrol is 35.9 cent per litre. Prior to the 9 March reduction it was 63.67 cent per litre and we reduced that to 46.59 cent per litre, a 21% VAT inclusive reduction. For diesel use as a propellent, the minimum rate is €330 per 1,000 l, VAT inclusive, which equates to 33 cent per litre. Prior to the 9 March reduction it was 53.5 cent per litre so there have been significant reductions in that.
On the questions on this matter, I am advised by the Revenue that the costs of reducing excise duty on petrol and diesel are estimated at €27 million and €69 million, respectively, including VAT, for the period from 10 March to the end of April. We introduced those measures and they are continuing today, next week, the following week and right up to budget day.
