Willie Penrose (Longford-Westmeath, Labour)
Link to this: Individually | In context

Question 22: To ask the Tánaiste and Minister for Finance the revenues collected from excise duties and VAT from motor fuels and other oils each year from 2004 to 2007; and if he will make a statement on the matter. [7718/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

I am informed by the Revenue Commissioners that the amounts of tax revenue collected from mineral oil tax and VAT on motor fuels and other oils for the years 2004 to 2007 are as follows. In summary, in the case of mineral oil tax, or excise duty, a total of approximately €1,963 million was collected in 2004; €2,048 million in 2005; €2,144 million in 2006; and €2,212 million in 2007 on motor fuels and other oils. In 2007, for example, excise on petrol and auto-diesel accounted for over 96% of the total yield.

In the case of VAT on motor fuels and other oils, it is estimated that some €491 million was collected in 2004; €586 million in 2005; €658 million in 2006; and €682 million in 2007. In 2007, petrol accounted for 68% of the VAT yield on motor fuels and other oils. The VAT yield on auto-diesel is relatively low as VAT on auto-diesel is a deductible credit for business in the Irish VAT system.

Excise rates on petrol and auto-diesel have not been increased since December 2003 with the aim of contributing to easing inflationary pressures and our excise rates are in and around the EU average. Indeed the excise rate on kerosene, which is the primary home heating oil, was reduced to zero over the 2006 and 2007 budgets.

The yield from excise duty on motor fuels and other oils increased by some 12.7% between 2004 and 2007, broadly in line with the use of such fuels. The yield for VAT on motor fuels and other oils has increased by some 39% between 2004 and 2007, reflecting both the increase in the use and price of such fuels.

The yield from excise, as excise is set at a nominal amount, does not increase as the price of fuels increase. On the other hand, the yield from VAT, as VAT is set as a percentage of the price, increases as the price of fuels increase. However, in this regard it should be borne in mind that to the extent that spending in the economy is reallocated to petrol and other oil products, 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.

A more detailed breakdown of the excise and VAT yields I have outlined are set out in the following tables.

Joan Burton (Dublin West, Labour)
Link to this: Individually | In context

What does the Minister expect will be the impact of the Government's proposals in regard to the use of bio-fuels and does he consider, in the context of UN and other reports, the movement to bio-fuels, in many cases, is resulting in hoarding and huge price rises for commodities such as wheat and other foodstuffs? Is the Minister satisfied that Government policy in this area continues to be the best policy in light of what we now know about the impact of bio-fuels on commodity prices for food and on some of the poorest people on the earth? What does the Minister propose in regard to the percentage of bio-fuels that he envisages being included in this mix?

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

This is a technical and statistical question. In regard to the bio-fuels issue, we are firmly committed to the development of bio-fuels generally. In the Finance Act 2006 we provided a significant tax measure to promote bio-fuels and the scheme which received the necessary EU state approval commenced in November 2006. It will provide for excise reliefs of up to 163 million litres per year. It will cost more than €200 million over five years. When fully operational it will result in CO2 savings of more than 0.25 million tonnes per year. It will contribute towards meeting the target of 5.75% transport fuel market penetration by bio-fuels by 2009. It will help reduce our dependency on conventional fossil fuels and will stimulate activity in the agricultural sector. These fiscal incentives were designed to kickstart the domestic bio-fuels industry and evidence suggests that it is happening.

Long-term general excise reliefs are not anticipated. There are additional non-fiscal measures that can be used to promote bio-fuels and to provide further market certainty and encourage projects of scale. The Government has signalled its intention to move to a bio-fuels obligation by 2009 which will require all fuel suppliers to ensure that bio-fuels represent a certain percentage of their annual sales. The obligation will fall under the remit of the Department of Communications, Energy and Natural Resources.

Joan Burton (Dublin West, Labour)
Link to this: Individually | In context

Is the Minister concerned that the growing scarcity of and demand for bio-fuels, in the way he has outlined, is expected to lead to very significant increases in the cost of foods in Ireland and in other EU countries and particularly for poor people in the developing world? Has the Minister had an opportunity to look at some of the assessments of the impact of bio-fuels both on inflation and on economies, particularly developing economies? Has he called for any reassessment of the impact, bearing in mind that our petrol prices are in the mid range in the EU, and that our public transport alternatives are strictly limited compared to most of our EU competitors? Will we face massive food price rises because of the changing strategy in regard to bio-fuels?

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

On bio-fuels generally, the deflection of grain, for example, in the US and elsewhere to the bio-fuel industry creates its own economics in terms of the food industry and the agri food industry in regard to demand and the cost of supplying raw material to the food industry as a result. Certainly there has been an increase in commodity prices. For European producers that has been against a background of a quite deflated market environment for some considerable time as against the large increase in inputs that has resulted in the meantime. It is only becoming a more attractive option now. Certainly grain growers have been in better spirits in the past year or two than would have been the case for the previous decade. In regard to the impact it would have on our situation here, domestically I would say the bio-fuels industry is in its infancy. We are kickstarting it and trying to get penetration of less than 5.75% in the transport fuel market. Hopefully that will work because it would be a further source of income for farmers. I do not think it will necessarily impact on the supply of grain to the food business because we have a well developed food industry here. Given our type of land and agriculture our intensive grain production should enable us to meet both markets. I do not see one at the expense of the other although I acknowledge that the overall global situation for world commodity food prices is on the up.