Monday 11 December 2017

Fuel hikes on cards in final Budget talks

Verona Murphy
Verona Murphy
Kevin Doyle

Kevin Doyle

Finance Minister Michael Noonan is holding in reserve the option of hiking taxes on petrol and diesel as Budget talks enter their final stages.

There is a growing view within Government that an increase of between 3 and 5 cents on a litre would allow for extra spending in other areas.

"The price at the pump has dropped substantially in the last year so there is scope to put a small tax rise on fuel and still have people paying less than 12 months ago," said a Government source.

"Even a 3 or 4-cent rise on petrol and diesel could bring in as much as €150m," said a source.

A series of rises in excise and carbon taxes since the economic crisis hit in 2008 saw 23 cents added to a litre of fuel.

However, economic factors have seen petrol prices fall by around 19 cents a litre in the 12 months to September, while diesel is now 23 cents cheaper than it was at the same time last year.

Mr Noonan has already indicated that he is considering hiking taxes on the 'old reliables' of cigarettes and alcohol.

Children's Minister James Reilly is pushing for a 50c increase in the price of a pack of cigarettes in the Budget.

It is widely expected that Mr Noonan will agree to these proposals on "health grounds".

An additional 50 cents on cigarettes could raise an extra €63m, and 5 cents on the pint would bring in €33m.

This extra income would allow Mr Noonan to go beyond the €1.5bn package of tax cuts and new spending that he has committed to for 2016.

A decision on potential rises in excise duties will be among the final Budget measures to be signed off before the details are announced next Tuesday.

Sources say that when all other areas are dealt with, the taxes on petrol and diesel will be on the table.

However, any hike to fuel prices will be met with a angry reaction from hauliers and motorists.

President of the Irish Road Haulage Association (IRHA) Verona Murphy told the Irish Independent her members would be furious with such a price hike.

"We are expecting them to reduce motor tax for hauliers so if they just pull that back in another tax it's no good," she said.

The IRHA wants the Government to reduce tax on large trucks from €4,200 to closer to the Northern Ireland rate of €900. "We are looking to be brought in line with the North because we need to be competitive," she said.

AA Roadwatch's Conor Faughnan said that "an enormous 60pc of the retail price of fuel is tax".

"Only for those emergency tax rises during the economic crisis, we would be looking at petrol costing less than €1 a litre now.

"Motorists have a reasonable and justifiable expectation that fuel takes should start coming down," he said.

Irish Independent

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