Seymour Crawford (Cavan-Monaghan, Fine Gael)
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Question 331: To ask the Minister for Finance the amount of VAT collected on diesel and petrol in each of the past five years; his views on reducing the level of VAT in view of the increasing cost of these products to motorists and so on; and if he will make a statement on the matter. [26406/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I am informed by the Revenue Commissioners that the information to be furnished on VAT returns does not require the yield from particular sectors of trade to be identified. However, it is estimated that the amount of VAT received on auto diesel and petrol in each of the past five years is as shown in the table below:

It should be noted that the VAT content of purchases of auto diesel is a deductible credit for business in the Irish VAT system. The increase in the estimated amount of VAT received from auto diesel and petrol arises in part from increases in fuel prices but also from the very strong growth in the economy over the period in question. Fuel prices are driven by a number of factors including the price of oil on international markets, exchange rates, production costs and refining costs. The rise in oil prices over recent periods reflected additional factors such as geopolitical uncertainty, supply disruptions and strong economic growth in countries such as China.

In relation to the rate of VAT applicable to fuel, the position is that the VAT rating of goods and services is subject to the requirements of EU VAT law with which Irish VAT law must comply. Petrol and auto diesel are subject to the standard VAT rate which in Ireland is 21%. It would not be possible to reduce the VAT rate applicable to motor fuel without reducing the rate for all goods and services subject to the standard VAT rate. A decrease of 1 per cent in the standard VAT rate would cost the Exchequer €390 million per annum. Such a reduction would have little or no impact on the price of fuel but would be very costly to the Exchequer.