Good news for motorists as fuel tax cuts to be extended despite Green resistance

Green Party leader Eamon Ryan strongly believes the cuts should not be extended beyond this month.

February 04 2023 02:30 AM

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Excise duty reductions on motor fuel look set to be extended beyond the end of the month with concerns in Government over the rising cost of petrol and diesel.

Fianna Fáil and Fine Gael are planning to face down the Green Party over the cost-of-living cuts introduced last year to help alleviate the cost of driving.

Green Party leader Eamon Ryan has strongly indicated he does not believe the cuts to duty on petrol and diesel should be extended beyond February.

However, there is increasing pressure within the backbench ranks of Fianna Fáil and Fine Gael to keep in place the excise reductions.

The excise duty cuts reduce the cost of a litre of petrol by 21c and diesel by 16c. The cuts were introduced last year and extended until the end of this month in the Budget.

There are also concerns over the impact carbon tax increases will have on the cost of driving when they come into effect in May.

The Government is due to open talks next week on a range of cost-of-living measures which are due to run out on February 28.

This includes Vat reductions on energy bills and the hospitality and tourism sector.

It was previously revealed by the Irish Independent that an extra €200 electricity credit is likely to be introduced to help households with their bills before the end of the year.

Similarly, senior government sources said they do not want a ‘cliff edge’ approach to the excise duty cuts on fuel due to the still high prices of petrol and diesel at the pumps.

In the Dáil this week, Mr Ryan said we “need to wean ourselves off” the Government’s cost-of-living supports to ensure the tax base is protected.

Before Christmas, the Green Party leader also said he did not believe excise cuts on fuel should be extended beyond the February deadline and pointed to a scheme he introduced to support the haulage industry which is significantly affected by the rising cost of fuel.

However, there is a growing demand among TDs and ministers in the two main Coalition parties for the excise duty cut to remain in place to assist people who rely on their cars.

On Wednesday, the Fine Gael parliamentary party heard calls for the excise duty cuts to remain in place.

Taoiseach Leo Varadkar also noted that ending the excise reductions would bring the price of diesel up to almost €2 per litre again.

A Fianna Fáil cabinet minister also said the Green Party will “just have to accept” that people will need assistance with the cost of motor fuel for a few more months.

Another Fianna Fáil source said the excise duty cuts could not be unwound all at once because it would add more than 20c to a litre of fuel.

The latest AA Roadwatch price survey put the average cost of petrol per litre at €1.61 while diesel was €1.71.

There is concern in Fine Gael over the impact that increasing the duty on fuel will have on people living in rural Ireland who cannot rely on the same level of public transport as those based in cities.

There are similar concerns in Fianna Fáil but the Green Party is anxious to encourage people to use public transport.

Meanwhile, European Central Bank president Christine Lagarde called on eurozone member states to begin unwinding cost-of-living supports introduced to battle record levels of inflation.

“As the energy crisis becomes less acute, it is important to now start rolling these measures back promptly in line with the fall in energy prices and in a concerted manner,” Ms Lagarde said.