Ged Nash
Ceist:6. Deputy Ged Nash asked the Minister for Finance if he will consider deferring the planned excise duty increase on petrol and diesel due for August; and if he will make a statement on the matter. [15013/24]
Amharc ar fhreagraWednesday, 10 April 2024
Ceisteanna (6, 31)
Pádraig O'Sullivan
Ceist:31. Deputy Pádraig O'Sullivan asked the Minister for Finance if he will detail the estimated cost to the Exchequer of the reinstatement of fuel excise relief in April 2024; and the estimated cost of the reinstatement in August 2024; and if he will make a statement on the matter. [15286/24]
Amharc ar fhreagraFreagraí ó Béal (11 píosaí cainte)
On budget night the Labour Party moved a motion to seek a deferral of the planned excise duty increases pushed on punters at the pumps, at least until budget 2025 next October. On budget night the Minister, Deputy Ryan, refused to accept the Labour Party amendment to the motion and we have seen excise duties rise at the pumps on 1 April - "April fuels day", as it was dubbed by Pat Flanagan in the Sunday Mirror. We have seen that increase in April and we will see a further increase in August. I am making the case that should be deferred and at least reviewed in the budget in October 2024.
I propose to take Questions Nos. 6 and 31 together.
At the outset, the Deputies should note that the Government and I are conscious of the implications of fuel costs for all sectors of society. This is reflected, as I said earlier, in the fact that, in 2022, in light of the acute impact rising prices were having on households and business, the Government provided for excise rate reductions in the order of 21 cent, 16 cent and 5.4 cent on a litre of petrol, auto diesel and marked gas oil, respectively. These temporary reductions were initially due to end at the end of August 2022, but following review and monitoring of fuel prices, they were extended until February last year, with a phased restoration beginning in June of last year, followed by a second restoration last autumn. As the Deputy will be aware, a final restoration of excise rates was due to take place at the end of October last year, but in the budget I provided for a further extension until the end of March this year, with a phased restoration occurring in two stages on 1 April 2024 and 1 August 2024.
As the Deputy has referred to, the first stage of this final restoration came into effect on 1 April last. Inclusive of VAT, the mineral oil tax rates on petrol, auto diesel, and marked gas oil increased by 4 cent, 3 cent and 1.7 cent per litre, respectively. The amounts due as part of the final restoration scheduled for 1 August this year are of the same magnitude. In addition to rate increases related to reversing the 2022 mineral oil tax cuts, increases to the carbon component rates of mineral oil tax on marked gas oil are legislated to come into effect on 1 May 2024, when the amount charged per tonne of carbon dioxide emissions from non-auto fuels increases from €48.50 to €56.00. This increase, inclusive of VAT, will add 2.3 cent per litre to marked gas oil. Increases to carbon component rates of mineral oil tax on petrol and auto diesel are legislated to come into effect on 9 October this year, when the amount charged per tonne of carbon dioxide emissions increases from €56 to €63.50. The 9 October rate increases will add, inclusive of VAT, 2 cent per litre to petrol and 2.5 cent per litre to auto diesel.
A number of factors impact the final retail price of fuels, including energy market dynamics, wholesale pricing, individual retail pricing policy, transport costs, exchange rate fluctuations and taxation. While taxation affects the final retail price, amendments to tax rates cannot fully absorb price shocks given the larger impacts of energy markets and embedded costs as well as pricing policy at wholesale and retail level. The Government has provided relief to consumers and businesses since early 2022 through a number of support measures, including the temporary reductions to which the Deputy has referred. However, these measures were introduced as temporary support measures and involve an ongoing cost to the Exchequer while they are retained.
With regard to the parliamentary question from Deputy O'Sullivan, he should note that the estimated receipts in 2024 from the recent 1 April increase in mineral oil tax rates and the increase scheduled for 1 August are €102.4 million for the 1 April increase and just below €51 million for the 1 August increase. The Deputies should note that I will continue to monitor and review the position in the coming months in the context of the final phase of excise rate restorations due to take place in August this year.
I thank the Minister for his response. I think it does make sense for him to review the position and defer the Government-imposed planned increase set in train for 1 August. We have had a 4 cent increase per litre on petrol and 3 cent on diesel. The Minister has outlined that. He has said, quite correctly, that the Government is not responsible and cannot manage all price shocks. This is not a price shock based on the international market and international trading conditions. This is a Government-imposed increase on hard-pressed consumers. Consumers are still getting stiffed at the checkout. Consumers are, quite frankly, being ripped off by telecoms companies, and while the Minister will say inflation and the cost of living are coming down, the reality is the rate of increase is slowing and the cost of living is still extremely high, especially for those working people on small or fixed incomes. The Minister needs to reflect on this. He will be familiar with the issues that Border garage retailers are experiencing and the differential between North and South. That is putting real jobs at risk in Border counties like my own in County Louth.
I appreciate the figures the Minister gave me of €102 million and €51 million for both of those increases. My question was with specific regard to the numbers because when we have this debate, it is easy to call for deferrals and putting things on the long finger. It is also important to highlight that it is €153 million, and the people calling for deferral will need to explain their own position on the other side as to where they might source that money or otherwise.
I know people are hard pressed. That goes without saying. All of us in the House and those belonging to us, our friends and family, watch the forecourts and the prices going up and down. That volatility is making things difficult for people. However, I welcome the Minister's statement today and when he earlier answered other Deputies' questions in terms of keeping the position under review. That is the responsible position to take and he has intervened in the past, as he alluded. Going forward, if the case arises, I hope he will be given an opportunity to possibly intervene again next year.
I get the impression the Minister is trying to say this is costing the Exchequer. I submitted a question a week ago and got a response about the amounts of taxes and levies on a litre of petrol and a litre of diesel. Right now he is getting 89 cent per litre on one litre of diesel. That is higher than at any time in the past five years. I am not talking about the percentage; I am talking about the actual amount, and we still have two increases to go. It will be 15% higher by 9 October than at any time since January 2020. On petrol, it is the same story. It will be 10% higher. This impression that it is costing the Exchequer to defer these increases is not actually true. Look at the actual amounts going in there. I agree with Deputy Doherty that these increases will devastate filling stations along the Border. The differential on 9 October will be approximately 15 cent per litre. It will close them.
I thank the Deputies for their comments. Deputy Nash can certainly use the language he has used about it being a Government-imposed planned increase. He should also acknowledge that a Government cut the excise, and what is at play on 1 April and 1 August is a restoration of that reduction.
However, I have acknowledged that the situation is volatile. Deputy Doherty raised the case earlier of the garage owners around the Border area. It is a valid point. It is one I am conscious of. It is one that I will take into consideration later in the year when we are making further decisions and we are reviewing this in the lead-up to 1 August. There are different factors that impact on what the price will be and there are also different factors that determine where people will do their shopping, including where they will purchase their fuel. Of course price is one of those factors and there is a price difference currently, in particular in respect of petrol. I acknowledge that. I am aware of that. I have asked my Department to monitor that. I acknowledge the substantive point. It is not one that I am blind to. That is why I have given a commitment to keep this under review and to have a look at it again as we approach that final restoration.
It has to be kept under review. It fact, the Minister should make a clear statement here today that he is actively considering deferring the planned increases in August and October, respectively, which will make the differential between retail prices in the South vis-à-vis the North much more significant.
The Minister is quite correct. When people cross the Border from Drogheda or Dundalk to fill their car in Newry, or just across the Border in the petrol stations there, they take an extra few miles of a trip to do their shopping. That is impacting on retailers right across the Border region, as other Deputies have pointed out. I implore the Minister to keep this under review. It is having a real impact on the bottom line for hard-working people. My own area has been subjected to significant tolls. For example, there are a number of tolls around the Drogheda area. Increased tolls increase excise. Increased carbon taxes have been legislated for by this Legislature, but I am not talking about carbon taxes. I am talking about excise duty and the impact it is having on the everyday lives of motorists, including people getting to work and people operating small businesses.
I join Deputy Nash in supporting calls to look into the impacts that will be felt, particularly in Border counties. When one is talking to hauliers or people whose business is on a forecourt, one hears genuine concern about fuel tourism and the impacts on Border counties going forward. That is possibly compounded by the UK chancellor's recent decision to extend the deferral of excise across the Border.
I suggest that the Department should undertake some type of retail impact assessment of the impacts on businesses across the Border. The fact that the Minister is keeping the decision on excise rates under review, as he has said, might allow him to move when the time is appropriate or when he sees fit.
Does Deputy Harkin wish to add something?
Yes. Thank you, a Cheann Comhairle. I am glad to hear that the Minister will keep it under review but we need to hear more than that because for filling stations along the Border, as I said, by 9 October the differential will be 15 cent per litre. They cannot remain open. They cannot sell fuel at that difference in price. It is not only stations along the Border that are affected. If one looks at the figures for the average number of kilometres driven each year by car owners, one will see that the national average is 16,300 km, but in Sligo and Donegal it is 17,500 km and in Leitrim and Roscommon it is 19,000 km. The cost to ordinary car owners is much greater in rural areas. Finally, I come back to what I said earlier. Right now, the Minister is getting 89 cent per litre on diesel and 98 cent per litre on petrol, which is higher than the amount he was getting per litre at any time in the past five years. He does not need increases in August or October.
I acknowledge the points that Deputies Nash, Harkin, Pádraig O'Sullivan, Doherty and Danny Healy-Rae have made in respect of this issue. I have given a commitment to keep it under review, in particular as we move through the month of July. I acknowledge and accept that this is a significant issue for forecourt retailers in Border counties. I also acknowledge that there is a wider economic impact. We have had a cross-Border dynamic in both directions depending on the relative strength or weakness of the currencies, and what the price is before conversion, etc. I accept that it can drive footfall and shopping spend to either side of the Border, depending on the way the numbers line up at any point in time. I note that. I have asked my Department to keep this under review. I understand it is a question that is wider than excise, but where excise falls can make a difference in terms of the decisions that consumers make in the Border area. I accept that and I will take that into account as the year goes on.