The Government aims to “go further” to reduce the cost of fuel by cutting VAT, according to a Minister of State, while an industry representative has denied allegations of “profiteering” amid a cut in excise duty.
Excise duty was cut by 20 cent per litre of petrol yesterday, and 15 cent per litre of diesel, but many drivers have continued to see prices above €2 a litre at the pump.
Junior Minister Niall Collins said further measures to reduce the cost of petrol and diesel are under consideration, including a potential cut to the current VAT rate of 23 per cent on both fuels.
“We’re now engaged with the European Commission around the VAT derogation, and the VAT directives within which we have to work with,” he told Newstalk.
“These are placing constraints upon Government in terms of how much we can reduce those rates by, so we have to engage with the European Commission to find a way around that, which will allow us to go further to reduce the cost of petrol and diesel to the motorist.”
Profiteering
Fuels for Ireland, the industry body for fuel suppliers and retailers, meanwhile slammed allegations of “profiteering” in the industry amid the excise duty cut.
Chief executive Kevin McPartland said Taoiseach Micheál Martin “got it wrong” when he suggested price-gouging following the excise cut was “morally reprehensible”.
The Government had been incorrect to say that the cut in excise duties would be felt from midnight on Thursday, Mr McPartland told RTÉ radio’s Morning Ireland, as the cuts would not be seen for days.
Fuel in the tanks at forecourts had been purchased before the excise cuts were introduced, he explained, and the cost at petrol pumps was dictated by when it was bought at wholesale price and when it was delivered.
There was no profiteering by the industry, he said. Prices were displayed on "big illustrated" boards at forecourts so drivers would know what they were being charged.
“In the next couple of days prices should come down,” he said.
Immediate VAT cut
A conversation about VAT reductions was needed, Mr McPartland told Newstalk, calling for an immediate cut of the standard rate to 13.5 per cent.
“The Government has said that this is something that they need to talk to European partners on, and it has been said they will look at it in the next week or two,” he said.
“We can’t wait for two weeks, we can’t wait for one week. If they need to speak with European partners, they need to speak with them now.
“I don’t understand why they haven’t had that conversation already – this has been abundantly clear for a couple of weeks that we needed to do this, but better late than never.
“The standard rate of VAT applies to petrol and diesel road transport fuel, and then the reduced rate, the 13.5 per cent, applies to home heating oil.
“I think that it’s entirely reasonable to think that the reduced rate should apply to road transport fuel, and I think that particular measures need to happen for home heating oil – I actually think that they need to subsidise home heating oils for the immediate future.”
When asked about the possibility of price freezes, Mr McPartland said that would be difficult under current Irish and European competition laws. He said he could not predict future prices given how wildly they had fluctuated recently. All the usual predictors were out the window, he said.
It comes after Ireland’s consumer watchdog said there is no limit to the fuel prices filling stations can set, and traders have no obligation to pass on a cut in excise duty to customers at the pump.
-Additional reporting by Vivienne Clarke.
