Fergus O'Dowd (Louth, Fine Gael)
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Question 236: To ask the Minister for Transport the contact he has had with the Department of Finance in relation to the cancelling of the fuel excise duty rebate for those in public transport services; the replacement mechanism options he favours; when he expects to see a replacement mechanism put in place; and if he will make a statement on the matter. [13160/08]

Noel Dempsey (Meath West, Fianna Fail)
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The EU Energy Tax Directive incorporated special derogations which allowed specific excise duty reliefs to be applied in a number of Member States below the EU minimum duty rate. In the case of public transport services under my responsibility, these derogations included reduced rates to apply to fuel used for scheduled bus services. Scheduled bus services comprise bus passenger services provided by Bus Átha Cliath, Bus Eireann, private operators in accordance with bus route licences under the 1932 Road Transport Act and holders of Authorisations pursuant to European Council Regulation 684/92 as amended.

While these derogations expired on 31 December 2006, Ireland, along with other Member States, sought retention of its derogations beyond that date. However the European Commission, which is the deciding authority, has refused all such requests. At the Commission's behest, the statutory basis for the removal of these excise duty reliefs is set out in the 2008 Finance Act. My colleague, the Tánaiste and Minister for Finance, has indicated that the Finance Act provides for removal of these excise duty reliefs with effect from 1 November 2008. In the interim, the reduced rates applicable to fuel used for scheduled bus services will be maintained.

My Department, in conjunction with the Department of Finance and other Departments is, in line with a Government Decision of July last, exploring if alternative support mechanisms, are possible, subject to compatibility with EU State Aid and other legal requirements.

Officials in my Department have been in contact with the Department of Finance in this regard and are taking legal advice in the matter, particularly as regards the appropriateness of alternative forms of relief. In this regard, the recently adopted EU law on public service obligations, which comes into effect in December 2009, is also relevant. My Department has also met the Coach Tourism and Transport Council, as well as CIE, on this matter.