Government taxes on fuel add to austerity burden for motorists

The price of petrol and diesel continues to be unacceptably high because of taxes which are adding to the austerity burden, according to the Automobile Association (AA).

Its latest survey of fuel prices shows that in September a litre of petrol cost 161.2c, up by 1.1c on the figure for August. Diesel also rose in price, up by 2.1c to an average of 152.1c per litre.

“High fuel prices continue to be a major problem for Irish motorists and for Irish businesses,” says director of consumer affairs Conor Faughnan. “2013 has been another grim year. While we are at the mercy of international market forces we should not allow that to blind us to the fact there is simply too much tax on petrol and diesel.”

In the last week, prices have moderated slightly in response to the fall in the value of the US dollar. This means motorists are doing marginally better at the pumps compared with the average price for September. However, the AA argues that market volatility isn’t the Irish motorist’s main problem: It’s government taxes on fuel. It is urging the Government to cut taxes on diesel and fuel in next month’s budget.

Since the fiscal crisis began in mid-2008 there have been five separate tax increases in both petrol and diesel. These have added about 23c per litre to the retail price of vehicle fuel, according to the AA.

Taxes now account for 57% of the retail price of petrol, and 51% of the retail price of diesel. The AA believes that the time is right for the Government to ease that burden.

“High fuel costs are an anti-stimulus measure,” said Mr Faughnan. “They add to the cost of living and they take disposable income out of local economies. High diesel costs also add significantly to the cost of doing business here in Ireland. We are an island economy which moves 95% of its goods by road.”

AA fuel usage figures show a car that does 12,000 miles a year (19,200km) at a fuel consumption rate of 30 miles per gallon (9.42 litres per 100km) will use 150 litres of fuel per month.

At current prices that motorist will pay €241.80 per month for petrol of which €137.82 is tax.

If petrol was taxed at the same rate now as it was before the emergency budget of October 2008, a litre would cost just €138.2c and a month’s fuel would cost €207.30.