Budget 2016: AA calls for reduction in fuel tax

Ahead of Budget 2016 the AA is calling on the Irish Government to begin the process of removing the substantial additional austerity-era taxes on fuel.

“A litre of petrol actually costs 44 cents.”  Says Director of Consumer Affairs Conor Faughnan. “Everything else is tax. We pay 136.5 cent at the pump at the moment because so much tax is added.”

The AA points out that since the emergency budget of October 2008 there have been five separate tax increases which between them have added 23 cent per litre to the retail cost of both fuels. Tax now accounts for 62.5% of the price of petrol and 63.9% of the price of diesel.

“This is excessive and it adds to both the cost of business and the cost of living for virtually everyone in the country.” Says Faughnan. “It takes disposable income out of everyone’s pocket and has far reaching consequences. As the economy returns to normal, fuel taxes should return to normal as well.”

According to the AA’s September national fuel price index the average price of a litre of petrol is 136.5 cent of which 92 cent (67.5%) is tax. Diesel now costs an average of 122 cent of which 78 cent (63.9%) is tax.

In the period from 2008 to 2011 the Irish Government applied five separate tax increases adding approximately 23 cent onto every litre of petrol and 18 cent to diesel.  The effect was masked at the pumps because the price of oil fell from a high of $150 dollars per barrel down to a low of €33 dollars on the same period. As the price crept back up the effect of those extra taxes has seen the cost at the pumps rise to all-time highs.

The AA calculates that a typical motorist driving a Band B car would save €240 on their annual fuel bill if the extra, austerity-era taxes were removed.

“Oil has been relatively kind to us so far this year which is some relief.” Says Faughnan. “But there is no justification for retaining those extreme taxes now that the government proudly tells us that the crisis is over.”

Table 1. Breakdown of the amount of tax applied to petrol

Table 2. Breakdown of the amount of tax applied to diesel

To find out more about the cost of fuel click here.