Michael Healy-Rae (Kerry South, Independent)
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To ask the Minister for Finance his views on reducing the taxes applied to fuel in view of the ever increasing cost of petrol and diesel at the pumps; and if he will make a statement on the matter. [38024/12]

Tom Fleming (Kerry South, Independent)
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To ask the Minister for Finance his plans to address the impact of rising costs of oil, petrol, gas and diesel on households and businesses who are struggling to meet their household bills throughout the country; and if he will make a statement on the matter. [38723/12]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 243 and 320 together.

Ireland, as with other countries, has experienced an increase in fuel prices. This increase is an international phenomenon. 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 in Northern Africa and the Middle East with potential supply disruptions.

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 per litre of fuel, 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 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.

It should also be noted that businesses are of course entitled to reclaim VAT incurred on their business inputs, including VAT incurred on fuel. For example, VAT incurred on auto-diesel and marked gas oil (MGO or green diesel) used in the course of business is a deductible credit for business in the Irish VAT system. VAT on petrol can not be deducted/reclaimed. There are no plans for temporary taxation adjustments, as to do so, could lead to significant costs to the Exchequer.