THE CHAIR OF the Irish Fiscal Advisory Council (IFAC), the state spending watchdog, has said there will be knock-on consequences for Budget 2027 in October if expensive fuel support measures continue.

The €500 million package announced yesterday afternoon, which comes on top of a €250 million package announced last month, is time-bound but on an enormous scale. Economist Seamus Coffey, the IFAC chair, said the two emergency fuel support packages were comparable to a tax package in an annual budget.

Coffey told the Claire Byrne Show on Newstalk: “From a budgetary perspective, we’re now getting to the stage where the impact, €750m, is quite significant already.

“If the measures are temporary, we wouldn’t expect there to be knock-on consequences for the Budget package for 2027, but if the temporary measures continue then we could expect there to be knock-on consequences,” Coffey said.

A 10c VAT-inclusive cut in fuel excise – which applies across the economy, not just to the agricultural and haulage sectors – will run until 31 July 2026. A scheduled increase on 1 May for carbon tax for ‘green’ diesel (for non road vehicles such as tractors), home heating oil and natural gas will now kick in in October.

A €40m scheme to support hauliers and coach operators with fuel prices will be in place for three months, while a €100m subsidy scheme for farmers, agricultural contractors and fishing is due to end in July.

Coffey argued that supports should be targeted at the poorest households, and noted that the cut in excise, for example, is universal.

Fossil fuels

He said government intervention to offset price increases on fossil fuels, at a time when the government actually wants to reduce use of fossil fuels and reduce fossil fuel-related emissions, represented a “contradictory approach”.

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It could reduce the incentive for people to switch to solar power or electric vehicles, Coffey said.

“If the government steps in every time the price [of fossil fuels] goes up that offsets that signal,” he said.