The fuels industry has said that the Government needs to look at the overall approach to taxation on fuel because the argument that increasing fuel taxes results in decreased demand “just doesn’t follow.”
The chief executive of Fuels for Ireland said despite the excise duty cut on petrol and diesel earlier this year, users are still paying more tax now on fuel than last year because wholesale prices have risen so much.
Kevin McPartlan said the same litre of diesel that costs €2 today cost around €1.40 this time last year, but he noted that volumes of sales continue to grow because people do not have an option in most cases.
Mr McPartlan said in the 48 hours before ministers announced in March this year the 15 cent cut in duty on diesel and a 20 cent cut in duty on petrol, the wholesale price of diesel had gone up 22 cent a litre.
“Ever since then, wholesale prices have steadily risen and that is reflected in prices at the pump. But still, today, people are paying five cent more in tax on their litre of fuel than they did this time last year despite that excise duty decrease,” he added.
He said VAT on fuel was a matter for the Government, but “they need to have a long hard look” at the taxation of fuels.
“They seem to think – or they have argued for many years, despite overwhelming evidence to the contrary – that by increasing the taxes, excise duties, levies, obligations on the sector that increase prices, they will do something to decrease demand, and they haven’t done. It never works, it never has worked,” he added.
“That is not to say that we don’t need to support the renewable sector – it’s something that we’re absolutely determined to do to help the nation reach its target of carbon neutrality by 2050 – we have to explore advanced synthetic fuels, biofuels, we have to look at hydrogen,” he stated.
He said because of the volatility since the invasion of Ukraine, it was impossible to tell what will happen to prices over the coming months.
“You could have a situation if OPEC countries decided to dramatically increase production rapidly, that would have a positive impact for consumers,” he said,
“There are scenarios in which prices could come down, there are scenarios in which prices go up – there is just no telling at this point in time,” he added.