Written answers

Tuesday, 26 April 2022

Photo of Joe CareyJoe Carey (Clare, Fine Gael)
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500. To ask the Minister for Finance the financial changes that are being proposed to mitigate the cost of road diesel for operators who run businesses that have heavy goods vehicles and other associated vehicles but do not have a haulage licence as they operate outside of the sector; and if he will make a statement on the matter. [20072/22]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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Ireland’s taxation of fuel is governed by European Union law as set out in Directive 2003/96/EC, commonly known as the Energy Tax Directive (ETD). The ETD prescribes minimum tax rates for fuel with which all Member States must comply. ETD provisions on mineral oils are transposed into national law in Finance Act 1999 (as amended) and this Act provides for the application of excise duty, in the form of Mineral Oil Tax (MOT), to specified mineral oils, such as petrol, diesel, and kerosene, that are used as motor or heating fuels.

The Diesel Rebate Scheme (DRS) was introduced in 2013 with the aim of providing support to road haulage and bus transport operators when the retail price of diesel is relatively high. The DRS operates on a sliding scale basis, whereby a partial rebate of MOT is available when the retail price of diesel exceeds €1.00 per litre excluding VAT. The repayment rate increases gradually as the retail price increases, up to a maximum repayment rate of 7.5 cents per litre.

The DRS operates as a State Aid under Commission Regulation (EU) No 651/2014, commonly referred to as the General Block Exemption Regulation. The DRS allows qualifying operators to benefit from an effective lower rate of MOT than other diesel users. While this application of a differentiated MOT rate on diesel for certain commercial uses is allowed under Articles 7.2 and 7.3 of the ETD, the ETD minimum rate, currently €330 per 1,000 litres, must still be complied with. This means that the effective MOT rate is what is considered in terms of compliance with ETD minimum. The effective MOT rate is determined by reducing the actual MOT rate by the maximum DRS repayment rate.

I am advised by Revenue that a repayment under the DRS may only be made to licensed road haulage and bus transport operators who purchase diesel in the State for use in qualifying motor vehicles. Operators established in the State must hold either an international operator’s licence or a national operator’s licence issued under the Road Traffic and Transport Act 2006. In addition operators must provide proof of tax compliance; either a valid Tax Clearance Certificate issued by Revenue or written proof of tax compliance in the form of a letter from the tax authority of another Member State where the operator’s road licence was issued.

The Deputy will be aware that in March this year, in response to the current fuel crisis, I introduced a significant reduction of 15 cents inclusive of VAT on MOT for diesel. I will shortly bring forward legislation to extend this rate cut until 11 October.  A further reduction of 1 cent per litre inclusive of VAT was applied from 1 April and this will also run until 11 October.

This means that the current rate of MOT, €405.38 per 1,000 litres, is €75.38 over the ETD minimum rate of €330 per 1,000 litres. However, when the DRS is taken into account the effective MOT rate is only €0.38 per 1,000 litres above the ETD minimum. It is for this reason that I have no scope under EU law to make any further material cuts to the MOT rate on diesel. Recent MOT rate changes are summarised in the table below, along with comparisons between actual and effective MOT rates and the ETD minimum rate.

The Government has also provided an €18m package of emergency support measures for licenced hauliers to address cost pressures arising from current high fuel prices. This targeted and temporary grant scheme will provide a payment of €100 per week for every heavy goods vehicle (over 3.5 tonnes) as listed on a road haulage operator’s licence. The scheme will operate for a period of 8 weeks and will be reviewed thereafter.

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