Fuel taxes are now part of the problem

The stoicism shown by the majority of people in the face of collapsing standards of living, soaring unemployment, vanishing opportunity, resurgent emigration, and unmanageable national and personal debt has been considerable.

In contrast, even if in a relatively minor way, someone in Fine Gael showed an unfortunate disconnection from reality by arranging a self-congratulatory knees-up to make the party’s first year in Government.

At least the proposal was quickly dropped when it was realised how inappropriate and juvenile it all was. Nevertheless, it would be interesting to know how far up the command chain the idea had climbed before it was knocked on the head.

Conversely, most everyone — probably because we have little or no choice — has shown the kind of reserve that is making a major contribution to the rebuilding the steady-as-she-goes stability vital to economic recovery and the kind of self-respect and national pride that should come easily in a functional, equitable society.

That does not mean that people are not angry. Most of us are outraged, offended to the very core of our being, that this small country has been saddled with bankers’ gambling debts but still we’ve had little more than raised voices in protest.

The timing of last year’s election, and the carnage inflicted on Fianna Fáil, acted a safety valve. However, that’s eaten bread by now and the prospect of another day of reckoning at the ballot boxes is so remote as to be irrelevant.

There is, by definition, still some faith in the system but it is being tested more and more each day. It is then more than unfortunate that costs greatly influenced by Government are at the very centre of our challenge.

Soaring fuel prices are becoming more and more forbidding as everyone who depends on a car to get to work realises. We all know families forced to ration heating oil like never before. Businesses — and the jobs they support — are being pushed closer to the edge by very strong fuel inflation.

The considerable excise component in these costs is not fixed but is a percentage and adds to the snowballing impact of dearer raw materials. The time has come to reconstruct these levies because they are now part of the problem rather than part of the solution.

It would be tragic if the resurgence in the farm sector was jeopardised by increased fuel prices. Hauliers are refuelling trucks abroad to save on fuel while the captive domestic market has no choice but to pay up and make cuts elsewhere. There is also talk of substantial increases in car taxes. These self-imposed cost increases — disincentives to job creation is another way of describing them — are unsustainable.

We have seen what happens when costs outstrip inflation in the health insurance market which is, to a large degree, defined by the State-owned VHI. People just stop paying premiums they can’t afford and fall back on the State thereby creating a vicious, self-defeating cycle.

In the last few days the ECB has again rejected proposals for reducing the €35bn plus Anglo Irish Bank bill, saying Government should instead improve its finances by, amongst other things, cutting public sector pay and social welfare entitlements.

These are hard, unattractive choices for any Government or society but they show the real cost of the Croke Park deal. They suggest too that we can expect fuel prices and other tax-sensitive costs to climb unless there is a significant change in policy. How else can these cuts be avoided?


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