Ireland will have the highest taxes on diesel and among the highest on petrol across the European Union if it persists with its plans for Budget 2025, an industry group has warned.
Fuels for Ireland, formerly known as the Irish Petroleum Industry Association, says Government plans to further increase carbon tax will exacerbate already challenging conditions for Irish motorists and hauliers.
The industry group, which represents Irish fossil fuel importers and distributors, has called on the Government to establish an expert group on taxation to examine the impact of fuel tax increases on the wider economy.
In July, the group – which counts fuel groups Applegreen, Emo Oil and Circle K among its members – said the Republic already had the third highest diesel and the seventh highest petrol taxes in EU at the start of this year, based on data from the EU Commission.
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Taxes have increased since then with further excise duty increases in April and August as the Coalition restored the rates that were cut in 2022 due to the soaring price of oil globally following Russia’s attack n neighbouring Ukraine, and its effect on pump prices.
The carbon tax is set to increase by €7.50 per tonne of carbon dioxide emitted from October, part of a series of annual increases envisaged in Budget 2020. The increase will apply from October 9th for auto diesel and petrol and from May 1st next year for all other fuels. That delay is to accommodate a lower rate on heating fuels during the winter heating season.
If the increase in the carbon tax goes ahead, taxes will account for 57.2 per cent of the price of a litre of petrol, pushing the Republic into third place across the bloc. Diesel, meanwhile, will be taxed at a rate of 54 per cent, “positioning Ireland at the top alongside Malta for the highest tax proportion in diesel prices”, Fuels for Ireland said.
Fuels for Ireland said the Government should establish an expert group on taxation, bringing together a “diverse range of stakeholders”, to develop a “balanced fiscal strategy”.
“With the upcoming budget poised to introduce further tax hikes, we need to address the significant impact these changes will have,” said Kevin McPartlan, Fuels for Ireland chief executive.
“This escalation will exacerbate the already challenging conditions for businesses, particularly in Border regions, and significantly increase costs for consumers. Immediate action is required from the Government to establish an expert group on taxation to develop a well-balanced fiscal policy that addresses these pressing issues and alleviates the economic strain on all stakeholders.”
Published in July, the Department of Finance’s Tax Strategy Group pre-budget papers said the often “considerable price differential” between solid fuels sold in Northern Ireland and the Republic can incentivise cross-Border sales of coal and other fuels. However, it said “nothing can be done” by the Revenue Commissioners to combat the practice because EU rules bar it from imposing barriers to the movement of solid fuels into the State from EU member states or Northern Ireland.
The tax group said Revenue and the Department of the Environment are in discussions about ramping up “inter-agency operations” to address “more effectively” the impact of non-tax compliant solid fuels from outside the State on air pollution.
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