The two most important cost items for ordinary motorists – fuel taxes and the cost of motor insurance – were left untouched by Minister Noonan in today’s budget, according to the AA.
The motoring organisation has argued for the gradual removal of additional austerity-era taxes that were applied to fuel since the emergency budget of 2008. Those extra taxes cost the typical motorist €520 per year*.
“A litre of petrol actually costs 44 cents,” says director of consumer affairs, Conor Faughnan. “Everything else – over 92 cent in the litre – is tax.” The AA believes this is an excessive degree of taxation that affects all parts of the economy, not just motorists.
“It is in effect an anti-stimulus measure that takes disposable income out of families’ pockets and adds to the cost of doing business. The emergency is over; so is the time for emergency taxes,” adds Conor.
The AA points to the huge increase of 26% year to date in the cost of motor insurance and is disappointed that the government had nothing to say on this critical issue in the budget. All motor insurance currently includes a 5% levy which adds to the cost.
“That levy originally dates back to the failure of PMPA more than 30 years ago,” says Conor. “The subsequent failure of Quinn Insurance in 2010 saw that levy increase. Irish motorists are the ones actually picking up the bill for market and regulatory failure.”
The AA welcomes the simplification and reduction of commercial motor tax, especially in relation to heavy goods vehicles.
*Fuel tax increases in the ‘austerity era’
October 2008: Emergency budget adds 8 cent per litre to excise duty on petrol
December 2009: Budget announcement adds Carbon Tax, effectively an excise duty increase of 4.2 cent for petrol & 4.9 cent for diesel
January 2012: General rate of vat rises from 21% to 23% affecting both fuels
May 2012: Carbon tax increases by 33% (from €15 to €20 per tonne) adding 1.4 cent and 1.6 cent to petrol & diesel pump prices respectively.
Current price per litre: Petrol 136.5 cent, diesel 122.0 cent
Price at pre-2008 tax rates: Petrol 117.8 cent, diesel 112.1 cent
Difference per litre Petrol: 18.7 cent Diesel: 9.9 cent
Difference per annum (petrol) €520 (based on 18.7 cent x annual usage of 2,038 litres)
Note: If a car does 12,000 miles per year at 30 miles per gallon (19,200 kilometres at 9.42 litres per 100 kms) it will therefore use 2,038 litres per year. At current prices (AA Fuel Price Survey Sept 2015) that costs €2,781 of which 67.52% or €1,878 is tax. At 2008 tax rates the cost would be €520 less at €2,261.