Leitrim calls for halt on planned fuel tax increase

Government taxes on fuel account for 54 percent of the cost of diesel and 57 percent of the cost of petrol, Leitrim County Council has heard.

This indicates that more than half of what Irish motorists pay for fuel is due to taxation, and a further double price hike may be proposed this October.

At the September Council meeting, Cllr Cormac Flynn proposed a motion urging the Minister for Finance to scrap the planned double price hike set for October.

“Carbon tax on fuel, part of the Green Party policy, was passed in 2020. The rationale behind the policy is largely based on the fact that an increased cost of consumers would affect a behavioural change and reduce the amount of fuel motorists use, thus reducing carbon emissions.

“Carbon tax is currently equated to €56 per tonne of CO2 emissions produced and it is targeted to rise to €100 per tonne in 2030,” Cllr Flynn explained.

“Fuel prices in 2020 when the policy was passed for diesel was at €1.19c. The same litre costs €1.74. 

“When much of this increase is down to the international price of fuel, much of it is also down to Government taxation such as excise tax, rural tax, carbon tax, and better energy tax at a VAT rate of 23 percent.

“The price for a litre of diesel is 80c and petrol is 77c before Government taxes are added.”

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A motion was proposed at September's Council meeting by Cllr Róisín Kenny

Cllr Flynn told the Council that Irish motorists have endured a 13 cent increase per litre on petrol and 9 cent increase on diesel since January.

In addition, Irish motorists are currently the third most taxed in Europe, and the plan for October will push Ireland to the top spot as the highest taxed.

“Since the inception of the carbon tax, fuel has risen by 46 percent. 

“It’s my argument that the Government has already recouped the planned revenue from this proposed increase in carbon tax by virtue of unplanned tax hikes, external factors and a consequential VAT increase to the tune of 11.5 cent per litre.”

Higher fuel prices have resulted in more tax being collected, however the VAT remains the same. In 2020, a 23 percent VAT on fuel equaled 21 cents per litre. By 2024, with fuel prices rising to €1.74 per litre, the same 23 percent VAT now equals 32.5 cents per litre.

“These price hikes will compound the cost of living crisis for all citizens, not just motorists. The increased cost including business, food, goods and services will be passed onto the consumer and everyone will suffer. 

“Instead of easing the burden on hard pressed households, this policy is set to raise the burden further, not just on motorists,” Cllr Flynn commented.

“This is an example where a policy has outstripped reality.” 

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Cllr Flynn’s motion was seconded by Cllr Gilmartin and garnered support across the assembly.