Business Personal Finance

Monday 24 April 2017

Charlie Weston: Vat is the main reason we end up paying so much in this State

The cost of a litre of petrol or diesel has reached its highest level in 18 months, according to a survey of fuel prices carried out by AA Ireland (Stock picture)
The cost of a litre of petrol or diesel has reached its highest level in 18 months, according to a survey of fuel prices carried out by AA Ireland (Stock picture)
Charlie Weston

Charlie Weston

Little old Ireland is a dear place in which to live. Our consumer prices are the third highest in the European Union, according to the Central Statistics Office.

Overall prices may be muted at present but some key goods and services are becoming more expensive by the day, while prices have remained stubbornly high on items that should have seen prices fall.

A good example of this is the cost of petrol and diesel at the pumps.

The cost of a litre of petrol or diesel has reached its highest level in 18 months, according to a survey of fuel prices carried out by AA Ireland.

A litre of petrol now costs 137.7c, up 1c on February prices, while diesel costs 127.1c per litre on average across the country, a month-on-month increase of 0.7c.

With the latest increase, fuel costs have now reached their highest level since August 2015.

The latest increase comes despite the price of a barrel of oil falling by $5 within the past month, with tax remaining a major driving force behind the overall cost.

And sure the Government is not unhappy. It gets 63pc of the cost of a litre of petrol in valued added tax (Vat) and excise duty.

Vat is one of the main reasons the cost of living is so high in this country.

Ireland has the eighth highest Vat rate in the world. Our standard rate at 23pc is a fifth higher than the international average.

The standard rate in Ireland is not far behind Hungary, which at 27pc charges the highest Vat in the world, according to a report by the Organisation for Economic Cooperation and Development (OECD).

Vat applies to a huge range of goods and services, including baby powder, telephone bills, detergents, non-oral medicines, car parts and IT equipment. And high taxes are the reason Ireland has the highest alcohol prices in the EU.

And prices are on the rise again, despite the recent devaluation in sterling making imposts cheaper.

The latest inflation figures from the CSO show Irish consumer prices rose by 0.6pc in February from previous month. This was up 0.5pc on last year.

Rising prices were put down to more expensive petrol and diesel as well as higher health, motor and home insurance premiums.

Premiums for home insurance jumped by more than 10pc in the last year, and health insurance premiums rose 8.7pc in cost. Health insurance is going up due to HSE double charging and due to the Government levy on policies.

Just don't expect prices to fall as long as taxes and levies are so high.

Charlie Weston tweets at @CWeston_Indo

Sunday Indo Business

Promoted articles

Also in Business