Cowen rules out reducing VAT on fuel

TAOISEACH Brian Cowen has ruled out a reduction on the VAT on fuel, meaning motorists will continue to suffer high prices at the petrol and diesel pumps.

In the Dáil yesterday, Fine Gael leader Enda Kenny urged Mr Cowen to consider such a move, saying consumers, businesses, farmers and fishermen were being “screwed to the ground” by fuel price increases. “The cost for a fill of home heating oil is now €1,000. These costs come on top of other price increases, relatively stagnant incomes, the rising cost of doing business, the loss of competitiveness and increasing mortgage repayments,” said Mr Kenny.

Five years ago, the average price of a litre of diesel was 78.2 cent, and this had risen to €1.32 by last month. The average price of a litre of petrol had risen from 86 cent in 2003 to €1.25 now, he said.

Mr Kenny criticised Brian Lenihan for suggesting there was no point “whingeing” about high fuel prices. “I was disappointed to hear the Minister for Finance, Deputy Brian Lenihan, say recently that people who complained about these price increases were whingeing. It is easy to dismiss such views as complaining when one is being driven around in a state car for which one does not have to fork out €100 for a fill of diesel on a regular basis.”

Mr Kenny acknowledged the main factor in the increase of fuel prices was the price of crude oil, but said: “In this state... there is another factor. This is the combination of taxation through VAT and excise duty which is levied on volume.” He said more than 50% of the price of petrol and 40% of the price of diesel was made up of tax and called on the Government to reduce the VAT on fuel.

Mr Cowen ruled that out. “There is no sound economic rationale for reducing VAT or issuing VAT reductions, especially as these price benefits will be taken either by wholesalers or producers, thus leaving the public subsidising an unsustainable fuel price level from public funds. That is in line with the position taken by almost all our European colleagues,” he said. He also said VAT could be reclaimed by hauliers, fishermen and other businesses.


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