Written answers

Tuesday, 22 March 2022

Photo of Sorca ClarkeSorca Clarke (Longford-Westmeath, Sinn Fein)
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231. To ask the Minister for Finance if serious consideration is being given by his Department to reducing excise duty on fuels considering the fuel crisis and the additional hardships being experienced by families as a result of increased prices. [13973/22]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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Ireland’s taxation of fuel is based on European Union law as set out in the Energy Tax Directive which sets the legal framework for taxation of fuels and electricity in the EU.  Ireland applies Mineral Oil Tax (MOT) to fuels used for motor or heating purposes. 

MOT is comprised of a non-carbon and a carbon component; the carbon component is also referred to as carbon tax. The Deputy will be aware that the 2020 Programme for Government committed to increasing the amount that is charged per tonne of CO2emissions from fuels to €100 by 2030. I followed through on this commitment by introducing legislation in Finance Act 2020 to provide for a 10-year trajectory for carbon tax increases to reach €100 per tonne of CO2 by 2030. This measure is a key pillar underpinning the Government’s Climate Action Plan to halve emissions by 2030 and reach net zero no later than 2050. 

It is important to note that a significant portion of carbon tax revenue is allocated for expenditure on targeted welfare measures and energy efficiency measures, which not only support the most vulnerable households in society but also in the long term, provide support against fuel price impacts by reducing our reliance on fossil fuels. 

The Government recognises the impacts of the current fuel price increases. These trends are driven primarily by global factors and it is not possible for the Government to fully insulate consumers against these price impacts. 

However,  I took the decision to alleviate some of these impacts through the domestic taxation of fuel with a temporary reduction in the excise rate for auto fuels and Marked Gas Oil.Effective from 10 March 2022 there is a reduction of 20 cent in the excise rates for petrol, 15 cent on auto diesel, and a 2 cent reduction for the excise on Marked Gas Oil (green diesel).  These measures are VAT inclusive and will last until 31 August 2022.

This excise reduction comes in addition to the package of measures announced by Government in February 2022 which includes:

- an increase in the energy credit to €200 including VAT, estimated to impact just over 2 million households

- a lump sum payment of €125 on the fuel allowance will be paid to 390,000 recipients

- there will be a temporary reduction in public transport fares of 20% from the end of April to the end of the year. This will impact approximately 800,000 daily users of Bus Éireann, Iarnród Éireann, Dublin Bus, Go Ahead, Luas, DART and Local Link services.

- a reduction of the Drug Payment Scheme from €144 to €80. This will benefit just over 70,000 families

- the working family payment budget increase will be brought forward from 1 June to 1 April and

- reduced caps for multiple children on school transport fees to €500 per family post primary and €150 for primary school children.

In designing a support package, the Government was conscious of the increase in energy costs but the need to target these supports. This suite of measures strikes the appropriate balance and provides support to every domestic electricity account via the electricity credit, but also provides specific supports for more vulnerable households through targeted welfare measures.

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