Cabinet won’t cut taxes on soaring fuel costs

The return of the school run is only days away, but already hard-pressed motorists will have no escape from soaring fuel prices after the Government ruled out following France’s lead and cutting taxes on petrol and diesel.

The AA has predicted that motorists could be paying record-high prices within weeks — as much as €1.70 for a litre of petrol, which would pass the previous high of €1.659 set last May.

Some industry experts have predicted that petrol could yet reach €1.80 a litre because crude oil prices were rising amid concerns over tightening supplies.

The French government announced yesterday that it would temporarily reduce taxes imposed on motor fuel in a bid to ease the pressure on motorists.

Although he did not give exact details, French prime minister Jean-Marc Ayrault said: “The government will take its responsibilities. That is to say that it will take fiscal measures to lower the cost of fuel.”

Here, opposition parties immediately called on the Government to follow suit.

Fianna Fáil transport spokesman Timmy Dooley said it was “blindingly obvious” that similar measures had to be taken.

“Hard-pressed families cannot take any more. The price of fuel is at an all-time high, and there seems to be no end in sight to the petrol hikes,” he said.

About 57% of the price of a litre of petrol goes to the State. Fixed excise duties charged on motor fuel amount to 58.8c per litre of petrol and 47.9c per litre of diesel. In addition, Vat is charged at 23% on the price of each litre.

Earlier this year, Mr Dooley put forward legislative proposals to cut the price of petrol and diesel by 5c a litre, but they were rejected by the Government.

“Petrol prices at that time were just below €1.65 a litre. While the Government has been sitting on its hands, prices are hurtling towards an all-time high of €1.80. How far do prices have to go before the Government wakes up and takes this seriously?” he said.

“If it is good enough for the French government to introduce temporary measures to halt the spiralling costs by lowering taxes, why can’t our Government do likewise?”

The Department of Finance firmly indicated that the Government would not follow France’s lead.

The department said Finance Minister Michael Noonan had already made clear in answers to parliamentary questions earlier this year “that temporary tax changes will not be introduced to counteract increase[s] in fuel prices as this would lead to a significant loss to [the] exchequer”.

When Fianna Fáil tabled its bill in April, Mr Noonan claimed the party was living in “economic dreamland” as the proposed reductions would take €150m out of the exchequer and wreak havoc with the budget calculations.

The AA, which has repeatedly urged the State to lower taxes on petrol and diesel, this week warned that rising fuel costs would deal a double blow to families already struggling with back-to-school costs.

AA figures suggested that the cost of filling a tank for a family driving a saloon car with a typical 55-litre tank could rise from €87.70 to €93.50 within a fortnight.


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