Oireachtas Joint and Select Committees

Tuesday, 3 July 2018

Committee on Budgetary Oversight

Environmental Impact of Fiscal Instruments: Discussion (Resumed)

4:00 pm

Ms Verona Murphy:

I thank the Chairman for that guidance.

There have been huge investments made by truck manufacturers to reduce air quality pollutant levels to near zero. For instance, new Euro 6 engines which have been fitted in commercial vehicles constructed since 2014 actually deliver an exhaust particle content which is comparable and, at times, cleaner than ambient air. In the real world the testing and compliance of heavy good vehicles have proved to be far better than for cars for which emissions cheating devices were discovered. It is partly due to heavy good vehicles being more expensive and requiring more physical space that manufacturers were enabled to fit the best technological solutions to meet the standards required. Only 10% of Euro 6 cars meet emissions limits in real world driving conditions. Therefore, in short, a simplistic analysis which proposes that excise duty on petrol and diesel be equalised in order that the price of diesel would increase would do nothing for the environmental sustainability of the national road haulage fleet, other than taking trucks off the road as haulage businesses failed owing to excessive fuel costs. Fuel price equalisation between diesel and petrol would not produce any positive environmental benefit from the national road haulage fleet but would inflict grievous financial damage on a sector that is already facing huge costs and massive uncertainty.

The revised diesel rebate scheme was introduced in 2013 by the then Minister for Finance, Deputy Michael Noonan. The intention behind the scheme was to sustain operators through fluctuating oil prices and bring certainty to the cost base for haulage operators when contracting to provide haulage services. This certainty, in turn, benefits exporters by helping to control transport costs and reduce at least one aspect of the variable component of costs. Under the scheme, the Revenue Commissioners repay a portion of the mineral oil tax on fuel provided that the purchaser is a qualifying road transport operator who meets specific requirements. The scheme has not worked effectively since it was introduced, as the applicable floor for diesel rebates was set too high at €1 per litre. The IRHA believes that for the scheme to make a substantial difference in current conditions, the floor should be reduced to 85 cent per litre.

Additionally, we believe that the maximum rebate available under the scheme should be increased from 7.5 cent to 15 cent per litre, with a maximum rebate of 15 cent per litre once the price of diesel reaches €1. Such a move would alleviate cost pressures on the sector, benefit the Irish Exchequer by reducing fuel tourism and bring certainty for Irish exporters by helping to control and predict stable transport costs. This proposal is based on current conditions. Should equalisation of the excise duty between diesel and petrol be contemplated, the diesel rebate scheme must be introduced to recompense the haulage industry in full for that increase.

The IRHA believes that rather than demonising diesel engines in a non-thinking and fad driven fashion, the ESRI and the environmental lobby should call on the State and the European Union to make the most of the solutions brought to market by Euro 6 emission standards, by encouraging the acceleration of fleet renewal and-or fleet retrofitting. Retrofitting to Euro 6 standards was undertaken on a grand scale by Transport for London and proved to be extremely successful.

The IRHA hopes that in budget 2019, the Government, when determining appropriate budgetary measures, will take account of the strategic importance of the licensed road haulage sector and note the precarious operating environment applying at present and the threats coming at the sector from Brexit. In particular, we believe the current economic context requires no increase in fuel costs for hauliers by way of taxation and necessitates a recalibration of the diesel rebate scheme to levels that are applicable in other EU countries and which will assist licensed hauliers to plan for the extremely challenging period ahead.

I will be pleased to answer any questions members may wish to raise.