EU deal ‘an excuse’ not to cut fuel price

The Government has been accused of using a European agreement signed seven years ago as an “excuse” for not bringing down the rapidly rising cost of fuel.

With a litre of petrol now averaging €1.65, twice what it was 10 years ago, the Government has ignored calls to intervene, claiming a 2005 agreement with the Economic and Financial Affairs Council blocks them from cutting tax on fuel.

Of the €1.65 pump price, almost 90c goes into the exchequer coffers.

The AA accused the Government of hiding behind “an easy excuse”.

A report yesterday offered proof that the spike in prices is forcing drivers off the road. Insurance company FBD said it has been able to reduce costs because of the extent to which drivers have cut their mileage, as fewer miles driven means less chance of accidents and therefore fewer claims.

The AA’s Conor Faughnan said it was not viable to blame Europe and said the Government was “scoring a massive own goal”.

“For a start, the Government put up the price of diesel and petrol by 4c per litre in the last budget which was only last December.

“While in opposition, FG was highlighting this issue very strongly and one of the policies proposed by the party seemed intelligent to us, a fuel price de-escalator concept where the additional Vat receipts that came in when the price went up would be used to lever down the excise duty and smooth the increase and moderate it somewhat.

“If that was a good idea three years ago, why is it not a good idea now? For all the difficulty the country is in right now, I don’t think you can say simply say ‘Europe’ as if abdicating policy responsibility here.”

Mr Faughnan pointed out that since the emergency budget of Oct 2008, there had been five separate tax increases on petrol and diesel, pushing the pump price up a further 23c.

“The Government is scoring a massive own goal here. Total fuel sales in Ireland fell by 10% in 2010 and 4% in 2011,” he told the Today with Pat Kenny radio show.

“They are down a further 5% year-to-date in 2012. That is much higher than can be explained by the recession.. The policy of super-taxes on Irish fuels is backfiring. It is lowering the total amount of fuel sold and that in turn is affecting the exchequer’s return.”

Fianna Fáil TD Timmy Dooley, whose party signed up to the EU agreement while in government, said: “I don’t accept that the Manchester protocol is something which is set in stone when the price of oil has gone to the level it has.

“I think the Ecofin agreement is more of a gentleman’s agreement than an international treaty. I don’t see any reason why it could not be renegotiated.”

However, Finance Minister Michael Noonan and fellow Fine Gael TD Kieran O’Donnell both claimed the agreement means the Government cannot cut the tax on fuel.


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