Brendan Smith (Cavan-Monaghan, Fianna Fail)
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128. To ask the Minister for Enterprise, Trade and Employment if he will give detailed and urgent consideration to the issues raised in correspondence (details supplied) in respect of recent additional costs on a sector that provides very significant employment throughout the country and is a critical component of the overall national economy; and if he will make a statement on the matter. [64174/25]

Peter Burke (Longford-Westmeath, Fine Gael)
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The Government recognises that the cost of doing business has been a challenge for firms in recent years, including in the transport sector, due to wider inflationary pressures – particularly energy – and Government-mandated improvements to working conditions. However, costs for firms, as measured by the CSO’s Wholesale Price Index, are now easing and were down 2.6% in the 12 months to September 2025.

Irish enterprises have faced a succession of shocks in recent years, including Brexit, COVID-19, the Russian war in Ukraine, supply-chain disruptions, the energy-cost crisis, inflation, wage pressures, and rising interest rates. While these factors drove significant cost increases, many have now begun to ease, as reflected in developments in price indices.

To address cost pressures and strengthen competitiveness, the Government has published the Action Plan on Competitiveness and Productivity and established the Cost of Business Advisory Forum, both Programme for Government commitments. The Action Plan focuses on regulatory reform, reducing the cost burden on firms, improving competition, and addressing energy affordability. The Cost of Business Advisory Forum brings together representatives from across sectors to consider drivers of business costs and potential mitigation measures. Its second meeting in July focused on energy costs, with a report to Government due in Q1 2026.

Budget 2026 provides a pro-enterprise package of €9.4 billion (€8.1 billion in spending and €1.3 billion in tax measures). Approximately €531 million of the Budget package – or 40% of the tax package – is dedicated to enterprise and SME supports, with a full-year cost of around €1.1 billion. Key measures include:

• Raising the R&D Tax Credit to 35%, inclusion of R&D employee emoluments, and increasing the first-year payment threshold to €87,500.
• Increasing the CGT Revised Entrepreneur Relief lifetime limit from €1 million to €1.5 million.
• Increasing the Employer PRSI threshold to ensure employers of minimum-wage full-time workers remain on the lower rate.
• Extending KEEP to 31 December 2028.

• Increasing the employer PRSI threshold from €441 to €496.
• Doubling the Innovation Grant Scheme to €10,000.
• Increasing the Energy Efficiency Grant Scheme to €10,000 while reducing the business contribution rate to 25%.
• Implementing an enhanced SME Test.

In relation to VAT, the VAT rating of goods and services is subject to EU VAT law, with which Irish VAT law is obliged to comply. In general, the EU VAT Directive provides that all goods and services are liable to VAT at the standard rate, unless they fall within categories of goods and services specified in the Directive, in respect of which Member States may apply a lower rate or exempt from VAT. Motor fuels, such as petrol and auto-diesel, are not included in the categories of goods and services on which the EU Directive allows a lower rate of VAT or an exemption to be applied, and so they are liable to VAT at the standard rate, currently 23%.

Petrol and auto-diesel are treated differently under Irish VAT law regarding VAT recovery entitlements of VAT registered taxpayers. VAT registered businesses are entitled to recover the cost of VAT on the purchase of diesel, used in the course of their business, as is the case with most business costs. However, the VAT Consolidation Act provides that VAT on petrol is not recoverable, including by businesses registered for VAT, except where the petrol is purchased as stock-in-trade of the business.

In relation to MOT, rates comprise a non-carbon and a carbon component. The carbon component, or carbon tax, is proportional to the fuel’s carbon dioxide emissions so higher emitting fuels, such as auto-diesel, have higher carbon tax rates. Auto-diesel is the predominant fuel in the transport sector and in November 2021 the applicable MOT rate was €535.46 per 1,000 litres. The current rate of €615.76 per 1,000 litres reflects an increase of €80.30 per 1,000 litres to the carbon component. This increase has been implemented in four equal amounts each October since 2021 under the 10-year carbon tax trajectory. Current and historical MOT rates for all fuel types are published on Revenue’s website.

The Diesel Rebate Scheme (DRS) is a State aid which provides a partial rebate of MOT to qualifying road haulage and bus transport operators, when the average retail price of auto-diesel exceeds €1.00 per litre excluding VAT. The DRS operates on a sliding scale basis, whereby the repayment rate increases gradually as the retail price increases, up to a maximum repayment rate of 7.5 cents per litre. The DRS repayment rate has been at the maximum level for almost four years. This is in additional to VAT registered businesses’ ability to deduct the VAT charged on the purchase of business inputs, such as auto diesel or HVO.

To incentivise the uptake of more sustainable and renewable fuels, biofuels are relieved of the carbon component of MOT and are not impacted by annual carbon tax increases. As a result, the MOT rate differential between biofuels and fossil fuels will continue to widen as the 10-year carbon tax trajectory up to 2030 is implemented. Information on effective MOT rates on biofuels compared with rates on fossil fuels, such as auto-diesel, is published on Revenue’s website.

Funding and schemes are available for the haulage sector to support the transition to Zero Emission operations. The Zero Emission Heavy-Duty Vehicle (‘ZEHDV’) Purchase Grant Scheme supports and promotes the decarbonisation of the heavy-duty sector to transition to Zero Emission vehicles. The Scheme supports the purchase of new large commercial vehicles by bridging some of the price difference between conventional heavy-duty vehicles and Zero Emission vehicles, which offer environmental benefits.

I am further informed by the Minister for Finance that policy with regard to Mineral Oil Tax is kept under review as part of the Tax Strategy Group and Budgetary cycle. Any industry proposals will be considered as part of this process.