Motorists already suffering massive fuel costs are now facing a 21pc hike in toll charges on the country's busiest motorway after Europe ordered the National Roads Authority to charge VAT.
The NRA has said it has been told to begin adding 21pc to the cost of using the M50 and Dublin Port Tunnel from July 1.
The move will affect up to 100,000 motorists who use the M50 every day, and a further 9,000 who use the tunnel, and comes after the European Court of Justice ruled last July that a VAT exemption on services provided by Irish public authorities gave them an unfair advantage over private operators who were obliged to charge the tax.
It meant local authorities would have to charge VAT on services, including library internet access, photocopying, refuse collection and car parking.
But despite there not being a rival, privately operated motorway serving the capital, meaning no competition issues arise, the Revenue Commissioners have ordered the NRA to impose VAT on the M50 and Dublin Port Tunnel.
The NRA said it would pay the VAT pending the outcome of an appeal. The monthly bill will be €1.4m. If it loses the appeal, the charge will be levied.
Motorists are charged different rates on the M50, with cheaper tolls applying to those who have a tolling account.
If VAT is imposed, it will mean that car-users who now pay €2, €2.50 or €3 per trip will have to pay increases of between 42c and 63c.
The highest charges are paid by heavy goods vehicles, which spend €5 or €6 per trip, with increases of €1.05 to €1.26 possibly on the way.