Seán Fleming (Laois-Offaly, Fianna Fail) | Oireachtas source

Again, this is a very significant issue affecting many people. Ireland's taxation on fuel is governed by European Union law set out in various directives, commonly known as energy tax directives, ETDs, which the Deputy will be aware of. These directives prescribe minimum tax rates for fuel, which all member states must comply with. These directives' provisions on mineral oils are transposed into national law under the Finance Act 1999, as amended, and provide 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 and heating fuels. The mineral oil tax is comprised of a carbon component and a non-carbon component. The carbon component is commonly referred to as a carbon tax and the non-carbon component is often referred to as excise, fuel tax or fuel duty.

In response to the current fuel crisis, the Minister for Finance introduced a significant reduction in the MOT rate applying to petrol on 10 March. Inclusive of VAT, the reduction is in the amount of approximately 20 cent per litre. I know 20 cent per litre seemed a very big reduction some time ago but when we see the price at the pumps is €2 plus, it is not as significant proportionally as it was. In addition to the rate change, the Minister has also brought forward legislation in the Finance Act to provide for a temporary reduction of 1 cent per litre, inclusive of VAT, to MOT on petrol. It is important to note the effective MOT rate on auto diesel must be considered in ensuring compliance with the ETD. The current MOT rate on auto diesel is €405.38 per 1,000 l, which is €75 above the ETD minimum.

The Minister has done a lot in this area.

We could usefully refer to the report of the ESRI on this topic, which reads: "If the objective is to protect those most affected by rising energy prices, cutting indirect taxes ... is a poorly targeted response".

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