Paul McGrath (Westmeath, Fine Gael)
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Question 82: To ask the Minister for Finance the extra revenue generated per month for the Exchequer from the surge in energy prices; and if he will make a statement on the matter. [27016/05]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The tax content on energy products may be made up of two elements, the excise content and the VAT content. Excise does not apply to all energy products although it applies to motor fuels and home heating oils. However, the rate of excise is fixed relative to the volume of fuel sold and therefore there is no increase in yield as the price increases. VAT is fixed as a percentage of price and, assuming consumption levels are maintained, increases in energy prices will result in additional VAT receipts from the energy sector.

It should be borne in mind that to the extent that spending in the economy is reallocated to motor fuels and away from other VAT-liable spending and to the extent that the overall level of economic activity is reduced by higher oil prices, there may be little or no net gain to the Exchequer as a result of any additional revenue that may accrue from motor fuels.

Given those qualifications, I am informed by the Revenue Commissioners that the estimated additional revenue generated for petrol and diesel for each of the first eight months of 2005 ranged from zero to €5.4 million as the prices increased. This figure relates to petrol and diesel only because monthly data are not available for other energy products.

Paul McGrath (Westmeath, Fine Gael)
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If I pull in for my petrol on the way home and spend €20 thereon, €13 of that €20 will go to the Exchequer as excise duty or VAT. If I pull in for €20 of diesel, €12 will go to the Exchequer. I do not suppose the Minister is pulling in to the pumps——

Brian Cowen (Laois-Offaly, Fianna Fail)
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I do.

Paul McGrath (Westmeath, Fine Gael)
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——but those who do, including me, note that the price has increased from approximately 80 cents——

Brian Cowen (Laois-Offaly, Fianna Fail)
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I live beside the pumps.

Paul McGrath (Westmeath, Fine Gael)
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I know the Minister lives beside them but he does not pull in to them and put his hand in his pocket.

Brian Cowen (Laois-Offaly, Fianna Fail)
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I do.

Paul McGrath (Westmeath, Fine Gael)
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The price has increased from approximately 80 cent per litre to €1.12 per litre, and even to €1.20 a couple of weeks ago. Is there not a considerable windfall tax accruing to the Exchequer by virtue of the increased cost of fuel? Ireland as an island nation is very susceptible as a consequence, because the freight sector depends on affordable fuel to remain competitive. There is great additional burden on the freight sector involved with exports out of Ireland. Let us not forget that in the past two years during which time Deputy Cowen has been Minister for Finance, the export sector has experienced the two worst years of the past 20. Therefore, is it not important that we keep the sector competitive and do whatever we can to achieve this?

Is it not true that the Minister is collecting from each household €900 more than he had anticipated? Is it not time that he fed back some of the gains he is making to the taxpayer in the interest of competitiveness?

Brian Cowen (Laois-Offaly, Fianna Fail)
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There may be few gains to the Exchequer because additional VAT receipts on energy may be offset by reduced expenditure elsewhere. That is the basic point I make to the Deputy. The unfortunate reality is that higher oil or energy prices can lead to a reduction in economic activity. Therefore, if one gains on one side, one loses on the other. People only have so much disposable income. The Deputy can take it from me that if one must pay more for one item, one cannot buy as much of another product.

Paul McGrath (Westmeath, Fine Gael)
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The Minister had an extra €1 billion yesterday.

Brian Cowen (Laois-Offaly, Fianna Fail)
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That is a macro-economic fact that is not being challenged by anyone I know of. Reducing excise taxes to help with the current price pressures is not the magic solution that some might think. Excise only applies to motor fuels and home heating oils. It does not apply to natural gas or electricity. Excise rates are subject to an EU framework and the scope for reductions is therefore limited. However, I understand the pressures that these increases have created. This also generates better energy efficiency in terms of what people want to do. It promotes alternatives to conventional fossil fuels, an area which we must continue to explore. These are all issues that arise as a result of the fact that we are in a higher energy regime than was the case in the past. It is not true that we have had the two worst export years of the past 20. The rate of growth has slowed but we continue to export more, year on year, than we did before.

Paul McGrath (Westmeath, Fine Gael)
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In his opening remarks, the Minister said that increased costs would result in reduced economic activity. That is not borne out by yesterday's returns. The Government has taken €1 billion more in taxes than it anticipated. If the Minister is saying that people are spending less because of additional fuel costs, that is not borne out by the returns and does not stand up. We have lost market share in terms of our exports over the past two years. There has not been the same level of growth. Market share is important to us.

Brian Cowen (Laois-Offaly, Fianna Fail)
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My reply to the Deputy's supplementary question was in reference to energy taxes and fuel prices. Thankfully, due to the way this economy has been managed and people being able to take advantage of the opportunities that arise here and in the international economy, we have increased buoyancy in the economy. I am glad that is the case. I presume everyone welcomes that fact. Other parts of the tax system have not been as buoyant as we would have liked. One must look at the entire picture.

Deputy McGrath emphasises the increase in VAT and the question of higher energy prices. I am explaining that, specifically with regard to higher energy prices, a sustained higher energy environment will impact on competitiveness, cost and world growth. Everyone acknowledges that. We have a mix of taxes and lower income tax. When a customer calls to a filling station and pays for petrol, he or she is also paying into a taxation regime which is much better than some of our competitors. These are realities. There is a mix in the taxation system which must deal with competitiveness in terms of job creation. We have created many jobs again this year. Central Statistics Office figures suggest almost 90,000, which is an extraordinary figure under the circumstances.

Dan Boyle (Cork South Central, Green Party)
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If one is paying taxes.

Brian Cowen (Laois-Offaly, Fianna Fail)
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Deputy Boyle obviously knows more than the CSO.

Dan Boyle (Cork South Central, Green Party)
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Few of them qualify to pay taxes. That is the reality.

Brian Cowen (Laois-Offaly, Fianna Fail)
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I look forward to answering Deputy Boyle's questions on energy taxes. It will be interesting to see how the three Opposition parties will figure that out in terms of the carbon tax he is calling for. It has not yet been mentioned in the Mullingar accord.