Supports that were introduced to address cost of living measures cannot be kept “forever”, Tánaiste Micheál Martin has said as cuts to excise on fuel begin to reverse from midnight.
From Thursday, the excise on a litre of petrol will climb by 5c, while the price of diesel will go up by 6c, as the Government begins to wind back measures introduced shortly after Russia’s invasion of Ukraine last year caused fuel prices to rise dramatically.
The increase will see the average price of a litre of petrol climb to €1.62, according to figures from the AA, while diesel will go up to an average of €1.53.
Two further excise duty increases will be introduced later this year with one coming into effect at the start of September and a final increase to be imposed in October.
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The cumulative impact of the duty restoration will add more than €200 to the annual cost of fuel for the average Irish motorist and leave the cost of fuel about 40 cent higher per litre than it was in the summer of 2020.
Once the full rate of excise is restored, the Exchequer will benefit by more than €700 million over the course of 12 months.
It comes despite the ongoing cost of living crisis, which has left the cost of domestic energy at more than twice 2020 levels, with grocery price inflation running at more than 16 per cent, according to retail analysts Kantar. The general rate of inflation still stands at more than 7 per cent.
Defending the decision to unwind the emergency relief, however, Mr Martin said: “We’ve extended those cuts on two occasions already, and this is the first phase of the phasing out of those cuts” that were brought in at the height of the crisis.
Speaking on RTÉ Radio’s News at One, he said the prices of diesel and petrol “have come down somewhat over the last 12 months”, adding “I think we do need to move into a different phase of dealing with cost of living issues”.
Promising further measures in the autumn Budget, he said: “I actually think we need to allocate resources, as we’ve been doing consistently, to reduce the cost of public services in education and in health and in child care, which matters to families in particular.”
However, Michael Kilcoyne of the Consumers’ Association of Ireland said the Government had “much more cash in their coffers” than they had when the excise duty cut was imposed. The increases could cost some people up to €40 per month, he said.
“Many of these people, like pensioners, people with disabilities, carers and so on, are on a fixed income,” and had no alternative but to pay this “penal tax”, he said. “It’s not right and it’s not fair.”
Marian Ryan of taxback.com also criticised the Government move, saying “the return of excise duty norms poses a serious risk to households as they continue to grapple with higher energy costs,”
She said that, while some people might try to cut back on using the car in the summer months by cycling or walking to work and school, “for a lot of people, this is simply not possible. Families living in rural locations will be particularly hit with these reinstated prices”.
Ms Ryan warned that the restoration of excise duties throughout the year “will add to transportation costs for Irish households. With this in mind, perhaps there is some merit in the Government taking heed of the public’s called for sustained financial supports. Because without them, people could be at serious risk of falling into unmanageable debt”.
