Government under fire to hand back petrol VAT

PRESSURE was growing on the Government last night to hand back the extra €50 million it is estimated to be creaming off drivers due to soaring oil prices.

With the cost of a litre of fuel hitting a record high of 137 cent in parts of the country, consumer groups and opposition parties demanded ministers stop squeezing motorists and return some of the €2.2 billion the exchequer rakes in from the pumps every year.

As drivers forked out an average 117.7 cent per litre yesterday - up from 94 cent in January - the AA calculated the Government would see some €50m extra forecourt VAT this year.

The Government takes 44.2 cent in excise duty per litre regardless of price, but profits from cost increases in its 21% VAT yield. On an average litre yesterday that was 24.6 cent, compared with 19.7 cent in January.

The AA led calls for the Government to give drivers a break, saying the average fuel bill is up €33 a month.

Enterprise Minister Micheál Martin told drivers to “shop around” as he rejected Labour calls for a maximum price order.

“Obviously, there is legislation there to ensure that all petrol stations display their prices. We will not impose price controls. That was last done 30 years ago and led to inflation. We live in a free society where people can shop around.”

AA public affairs manager Connor Faughnan said: “Whether you call it an indirect tax or a stealth tax, it doesn’t matter. People are having to dig deeper and deeper into their pockets while the Government is getting bigger returns in VAT than it budgeted for.

“A rough estimate is that it will receive around €50m more this year from petrol prices. The Government needs to give that money back by lowering VAT or the excise duty to help motorists out.”

Fine Gael enterprise spokesman Phil Hogan warned hauliers may have to lay off staff due to the spiralling fuel costs.

Labour Party enterprise spokesman Brendan Howlin demanded the Government impose a maximum prices order on petrol to halt the “profiteering”.

Petrol prices added to consumer gloom yesterday with the Commission for Energy Regulation allowing a gas bill hike of 25% while electricity costs are to increase 4.1% in January.

Revenue Commission 2004 estimates show the Government took €1.86bn in petrol and diesel excise duty and €336m in VAT.