Soaring petrol and diesel costs land €700m for Government

Soaring petrol and diesel costs land €700m for Government

The Exchequer is expected to reap millions of euro from the move to phase out the reduced excise rate on petrol and diesel, the Irish Independent has reported.

The scrapping of the lower rate of duty on the fuels could add €10 to the cost of a tank of fuel.

Finance Minister Michael McGrath has confirmed to Independent TD for Laois-Offaly Carol Nolan that the estimated additional receipts in a full year from the increases in excise duty of a total of 21c on petrol and diesel will amount to over €700m.

This is made up of additional excise duty of €478m over a full year, and higher Vat of €35m, for diesel; and an extra €159m, plus higher Vat of €35m, for petrol. The Vat is calculated on the higher price once the higher excise duty is applied.

To help people cope with the surge in the cost of petrol and diesel, excise duty on the fuels was cut last year.

The reduction was ​​15c per litre for diesel and 20c per litre for petrol. The cut was to counter the extraordinary rises in the cost of motor fuels in the past two to three years.

The Irish Independent article said the cost of filling up has shot up by 50pc for diesel drivers and by 33pc for those with petrol vehicles since October 2020.

Much of the diesel used in this country had been coming from Russia, so its price rise has been much more severe.

On September 1, petrol will go up by another 7c and diesel will go up by 5c. The remaining 8c on petrol and 6c on diesel will increase on October 31.

This means that diesel will go up a total of 18c. It was only cut by 15c. Once Vat is added to the excise duty calculations the increase will be higher than the original cut. This means petrol will go up 23c a litre from October.