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Government likely to vote against FF proposal to cut fuel duty

Fianna Fáil is to bring legislation before the Dáil this evening to cut fuel excise duty by 4 cent, offering an effective cut in fuel prices of 5 cent.

File photo
File photo
Image: Danny Lawson/PA Archive/Press Association Images

Updated 9.58am

THE GOVERNMENT IS likely to reject proposed legislation from Fianna Fáil to cut the price of fuel and diesel for motorists that will be put before the Dáil this evening.

The Motorist Emergency Relief Bill 2012 proposes to effectively cut fuel prices by 5 cent. The legislation aims to help motorists at a time when they face increasing fuel prices but the cut in duty – effectively a tax cut – would represent a loss of around €145 million to the Exchequer.

Though the Department of Finance declined to comment specifically on the proposed legislation this morning, the Minister for Small Business John Perry said in the Dáil last week that “there are no plans for temporary taxation adjustments” in relation to fuel.

Speaking on RTÉ’s Morning Ireland the Fianna Fáil finance spokesperson Michael McGrath said that his party was proposing a 4 cent reduction in the excise duty on petrol and diesel and with the VAT rate of 23 per cent it would effectively mean the cost would be reduced by 5 cent.

“I think everybody listening this morning will realise what the impact of the rising cost of fuel has been on there lives and clearly it is having a very depressing effect on the economy,” he told the programme.

“I think a lot of discretionary trips that people have are being postponed. It is changing behaviours,” he claimed. The legislation will be introduced in the Dáil this evening by the party’s transport spokesperson Timmy Dooley.

McGrath said that the loss to the Exchequer would be made up by the fact that the money consumers save would be spent elsewhere on “more productive sectors of the economy”.

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“What we are proposing is that you would free up some of the money that people are having to spend on fuel through this reduction and therefore you would allow people to make spending choices elsewhere in the economy,” McGrath added.

The legislation is due to be debated between 7.30pm and 9pm tonight before a straight vote is taken tomorrow on whether or not to permit the tax cut.

Speaking in the Dáil last Thursday, Perry said that Ireland’s excise duty rates were lower than most of the country’s main trading partners and “significantly lower” than in the UK and described the increase in the cost of fuel as an “international phenonmenon”.

He added: “Given the current pressure on the public finances, there are no plans for temporary taxation adjustments, as to do so could lead to significant costs to the Exchequer.”

Read: How much have fuel prices risen in Ireland recently – and why?

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Hugh O'Connell

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