Government to seek ‘flexibilities’ in EU law over fuel prices, says Taoiseach

The Government will seek “flexibilities” in EU law that will allow VAT on fuel prices to be reduced further without financial penalties being imposed on the State, Taoiseach Micheál Martin has said.

Speaking as he arrived at a special summit of EU leaders at the Palace of Versailles in France, Mr Martin said the war in Ukraine had had a dramatic impact on energy prices and supply.

The Taoiseach also said it was possible that Irish Defence Force personnel could be deployed at some stage around the border between the EU and Ukraine, as part of a peace-keeping or peace-enforcement mission.

The meeting in Versailles is being hosted by French president Emmanuel Macron and is discussing proposals to strengthen the EU’s energy independence as well as its defence capacity.

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Mr Martin said Ireland had availed of historic derogations for VAT on fuel prices that allowed it to apply lower rates. However, in a situation where a state varies its rate there is a danger it will lose the derogations.

The Government has already reduced the excise on petrol by 20c a litre and on diesel by 15c a litre in response to dramatic price hikes in fuel prices since the outbreak of war.

Mr Martin told reporters as he entered the palace compound that if Ireland reduced VAT further it would lose the derogation and would have to agree to a higher rate in future once the situation returned to normal.

He said Government was now seeking “flexibilities around that”. Minister for Finance Paschal Donohoe was also making the case for that with the European Commission, he added.

The Taoiseach said three key items would be discussed by the 27 EU leaders. “(We will discuss) investment in defence and security across Europe, with many member states reconsidering (their positions),” he said.

“The Ukrainian crisis has really changed the world order. Economic resilience and robustness will be a key part of tomorrow’s discussions in terms of key areas where Europe needs to be more resilient.

‘New initiatives’

“We saw that in healthcare in the context of Covid-19. There’s new initiatives in terms of semiconductors, for example, making sure that Europe is not too vulnerable, in terms of low level of production.”

He said the third issue was energy dependency.

“There is a declaration that’s been worked on, around reducing dependency on Russian gas and oil over time. Obviously, some states are far more reliant on the importation of (Russian) gas and oil. I think more strategically, we will see much greater emphasis over the medium term, on more renewables, effectively reducing dependencies.”

He said the crisis created by the war was a global one which had a huge impact on energy prices. Turning to the domestic impact, he said Government realised the significant impact the dramatic escalation in oil and gas prices was having on the Irish economy.

Asked about alleged price-fixing by some fuel suppliers in Ireland, he repeated his comments that it was “morally reprehensible in the context of a barbaric war”. He said the Competition Authority would have a role to ensure there was no price-fixing, or no cartels operating.

Asked about further sanctions being imposed by the EU, Mr Martin said it would be done in conjunction with the EU, US, Canada and the UK.

“My basic principle is that we should have unity of purpose on this, and we should move in unison.

“Because that will give the greatest impact in terms of pressure on Russia.”

He said it would be discussed at the meeting but because it was not a formal council, he did not think any formal decision would be made at Versailles.

Atrocities

Mr Martin said there was huge anger in Ireland against the atrocities in Ukraine. “We pay tribute to the journalists of the world who are bringing those photographs to us, and risking their lives, to get in behind the scenes or to show the war to the people. Because that is creating a huge momentum against the Russian Federation and its war on Ukraine In my view, in itself that will create pressure.”

He also praised Mr Macron for keeping the channels of communication open with Russian president Vladimir Putin in an effort to try to bring the war to an end.

Mr Martin said that while Ireland was militarily neutral it did not block other Member States from helping countries to defend their citizens against attacks.

Asked were there circumstances in which Irish Defence Force personnel could go to the borders of Ukraine to help in a humanitarian capacity, he said it was “always possible”.

“We stand ready to help neighbouring countries in terms of the humanitarian crisis in terms of logistics along the border,” he said.

Mr Macron said ahead of the meeting the war completely changed the architecture of Europe.

“Our democracy and values have been threatened. We must accept that sometimes we have to pay the price,” Mr Macron said as he entered the meeting.

“I will not spare any effort to achieve this ceasefire,” he said.