The fuel industry has said the government needs to look at the overall approach to fuel taxation because the argument that higher fuel taxes lead to lower demand “simply does not hold”.
The managing director of Fuels for Ireland said that despite the reduction in excise duty on petrol and diesel earlier this year, users are still paying more fuel tax than last year as prices for fat have increased so much.
Kevin McPartlan said the same liter of diesel that costs €2 today cost around €1.40 at the same time last year, but he noted that sales volumes continue to grow as people don’t have no choice in most cases.
Mr McPartlan said that in the 48 hours before ministers announced in March this year the 15 cent diesel duty cut and 20 cent petrol duty cut, the wholesale price diesel had increased by 22 cents per litre.
“Since then, wholesale prices have risen steadily and this is reflected in prices at the pump. But even today people are paying five cents more in taxes on their liter of fuel than at the same time. last year despite lower excise duties,” he added.
He said fuel VAT was a government matter, but “they need to look closely” at fuel taxation.
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“They seem to think – or they have argued for many years, despite overwhelming evidence to the contrary – that by increasing taxes, excise duties, levies, obligations imposed on the sector which raise prices, they will do something something to decrease demand, and they never worked, it never worked,” he added.
“That’s not to say we don’t need to support the renewable energy sector – it’s something we’re absolutely committed to doing to help the country reach its goal of carbon neutrality by 2050 – we we have to explore advanced synthetic fuels, biofuels, we have to look at hydrogen,” he said.
He said that due to the volatility since the invasion of Ukraine, it was impossible to say what will happen to prices over the next few months.
“You could have a situation if OPEC countries decide to dramatically increase production quickly, it would have a positive impact for consumers,” he said.
“There are scenarios in which prices could go down, there are scenarios in which prices go up – we just don’t know at this stage,” he added.