Bernard Durkan (Kildare North, Fine Gael)
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Question 142: To ask the Minister for Finance if a review will be undertaken regarding importation tax on a vehicle imported by a person (details supplied) in County Kildare; and if he will make a statement on the matter. [26055/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I have been advised by the Revenue Commissioners that there is no record of the person in question contacting Naas Revenue regarding a charge on the vehicle in question. I am further advised that when a query is received in a Vehicle Registration Office, the caller is asked to identify the type of vehicle and the information is input into the VRT database to calculate the VRT payable. In this case the VRT payable is €2,537.

Pat Breen (Clare, Fine Gael)
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Question 143: To ask the Minister for Finance the progress in agreeing an alternative scheme to replace the fuel excise refund scheme for the bus transport operators which is due to terminate on 31 October 2008; his proposals to address the high cost of diesel which is affecting the sector; and if he will make a statement on the matter. [26080/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The 2003 EU Energy Tax Directive incorporated special derogations which allowed specific excise duty reliefs to be applied in a number of Member States. In the Irish context, these derogations allowed inter alia for reduced rates to apply to fuel used for public transport services which includes school transport services. 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, who is the deciding authority, refused such requests.

The Finance Act 2008, as the Deputy is aware, provided the legislative changes to withdraw the relief in respect of fuel used for public passenger transport vehicles. The relief will be withdrawn with effect from 1 November 2008 and the appropriate full excise rates will apply from that date. In the circumstances outlined above the question of reconsidering or deferring the withdrawal of the existing relief does not therefore arise.

The Department of Transport and other relevant line Departments have, in conjunction with my Department, explored alternative mechanisms that might be used to direct Exchequer resources toward such services from that date, subject of course to compatibility with competition and EU State Aid requirements. While the matter is still being considered it is necessary however to stress, despite the claims being made otherwise, that introducing an alternative suitable mechanism is not a straightforward matter.

The increase in fuel prices is due to changes in the market and is not tax related. It is an international phenomenon affecting all countries, and all sectors of the economy and society. Ireland is indeed one of the lower taxation systems in relation to fuel. In comparison to our competitors, we are below the average price for the EU 15 and substantially below the UK. Furthermore, the excise rates for both diesel and petrol in Ireland have not been increased in the last four Budgets.

The Exchequer 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. In this regard it should however be borne in mind that to the extent that spending in the economy is re-allocated 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.

Our overall response to the increase in fuel prices is, as was adopted at the recent Ecofin and European Council meetings, that distortionary fiscal and other policy interventions should be avoided as they prevent the necessary adjustments by economic agents. This means that taxation on oil products should not be reduced. It would send the wrong signal to consumers and to oil producers.