Pearse Doherty (Donegal, Sinn Fein)
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3. To ask the Minister for Finance if he will reduce the rates of excise duty applied to petrol and diesel to the lowest rates permissible under the Energy Tax Directive in response to the rising cost of fuel; and if he will make a statement on the matter. [31503/22]

Pearse Doherty (Donegal, Sinn Fein)
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In the past year, we have seen petrol and diesel prices skyrocket. People are seeing that very clearly. I am sure the Minister of State sees it himself as he passes the petrol pump stations. In my village, we see petrol prices of €2.25. We are told that diesel prices will rise very soon. We all wish that every household and community had excellent public transport but that is not the case. Will the Government take further measures to reduce the price of fuel at the pump by reducing the rate of excise charge, providing an immediate reduction in the price of petrol and diesel, given the astronomical prices people are faced with today?

Seán Fleming (Laois-Offaly, Fianna Fail)
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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".

Pearse Doherty (Donegal, Sinn Fein)
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Is the Minister of State saying the Government is now acknowledging that what it has already done has been poorly targeted? A larger package - one where the vast majority of its measures are targeted - is needed. Other people are feeling the pinch, of course, which is why issues like excise also need to be considered.

Fair play to the Minister of State for mentioning that the minimum rate allowable under the directive is below the rate in Ireland at the moment. Let us be clear in that there are people who have to travel. Many are thinking twice before they get into the car, but they have to if they need to go to hospital or if they live in rural Ireland and need to go to work. Petrol now costs €2.25 per litre and diesel is increasing to the same level. It is predicted that diesel might even hit €2.50 in the next while. The current excise rate on petrol stands at 47 cent, but the minimum rate allowable is 36 cent. The current rate on diesel is 41 cent per litre whereas the minimum under the directive is 33 cent. This means that, inclusive of VAT, the Minister for Finance could reduce the price at the pumps tonight by 13 cent for petrol and 9 cent for diesel. That would not be enough, though. The Government also needs to engage with the Commission to get further flexibility on excise or VAT rates.

We know that prices will continue increasing, so for the Minister of State to say the Government will do no more is not acceptable for many of those who cannot get by any further.

Seán Fleming (Laois-Offaly, Fianna Fail)
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Our ability to reduce excise duty is impacted by various EU directives. I have covered the current MOT rates on petrol and auto diesel extensively. The MOT rates per thousand litres are €465 for petrol and €405.38 for auto diesel. Prior to March, the MOT rate on petrol was €636 per thousand litres, which was reduced by €170, representing a substantial cut of more than 26%.

The ESRI report is interesting. I accept there has to be a balance. We must help working people, but perhaps better-off people who have larger cars that are less fuel efficient will gain disproportionately compared with poorer people. The ESRI report reads: "Instead, increases to welfare payments, the fuel allowance, and even lump-sum payments like the household electricity credit are better targeted at those most affected by energy inflation."

Pearse Doherty (Donegal, Sinn Fein)
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I love how the Minister of State selectively quotes reports. Maybe he should quote the ESRI’s report where it states the Government has scope to do more. The Irish Fiscal Advisory Council, IFAC, believes more targeted measures could be taken. The Central Bank also states that the Government has that scope.

The taxman has been benefiting from inflation in petrol and diesel prices. As prices have soared over past year, we have seen 12 cent more being accrued in VAT. The VAT take on petrol and diesel has increased by between 42% and 46%.

What I am discussing are temporary measures to give people a reprieve. They would form a small part of an overall targeted package, but they would have a broader application. The Minister of State has acknowledged there are limitations on what the Government can do. We also acknowledge that, but the House has the ability to reduce petrol and diesel prices tonight by 13 cent and 9 cent, respectively. That is a pressure we can remove from many families and workers. Will the Minister of State set out the rationale for why the Government will do not this? If it will not do that, will it take on board any of the other suggestions from the ESRI, IFAC or the Central Bank and introduce something instead of sitting on its hands while families are under massive pressure and more are slipping into poverty, including energy poverty?

Seán Fleming (Laois-Offaly, Fianna Fail)
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The Deputy has again mentioned the ESRI report. I thank its authors – Ms Michelle Barrett, Dr. Niall Farrell and Dr. Barra Roantree – on their excellent report, which was funded by the Community Foundation for Ireland, whose chief executive wrote in the foreword, "Many of the 5,000 voluntary, community and charitable groups we work with will be looking at this report and no doubt will reflect on it as they make pre-Budget submissions to government." Essentially, the report is a great bank of information published by the ESRI at the request of the Community Foundation for Ireland. It will facilitate proactive, detailed and more informed, fact-based and data-based pre-budget submissions, which will help the Government to take everything into account, as suggested by the chief executive in the report.

Pearse Doherty (Donegal, Sinn Fein)
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Has the Minister of State no shame? One in three households is in energy poverty.

Seán Fleming (Laois-Offaly, Fianna Fail)
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The Deputy knows there are different issues affecting VAT. He is aware excise is applied to a unit of fuel and remains the same regardless of the fuel's price. It is based on volume. Therefore, no extra revenue is raised from the excise duty if the price increases. VAT is different. People ask why excise duties cannot be reduced, but excise is based on volume, not price. However, I accept there have been extra VAT receipts, which have gone some of the way towards paying for some of the measures we have introduced recently.