The Exchequer took a 10 per cent hit on its environmental tax receipts last year due to the temporary reduction in excise duty on fuels, new data from the Central Statistics Office (CSO) shows.
There was a total of €4.5 billion in environment-related taxes collected during the year, which was €500 million less than in 2021. CSO statistician Gerard Keogh said the decrease was due to the introduction of a temporary reduction in excise duty on fuels in April.
The reduction was announced by then Minister for Finance Paschal Donohoe in March 2022 as a result of skyrocketing price rises following Russia’s invasion of Ukraine.
Under the change, excise duty was reduced by 20 cent per litre of petrol and 15 cent per litre of diesel. There was also a reduction of 2 cent in the excise duty charged on marked gas oil.
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For context, Mr Keogh said environment taxes have grown from €4.4 billion in 2013 but fallen from €5.2 billion in 2017.
As a percentage of total taxes, environment taxes were 9 per cent in 2013 compared with 4 per cent of total taxes last year.
Energy taxes, which include transport fuels, amounted to €2.8 billion last year, which accounted for 61 per cent of all environment-related taxes.
Transport taxes, including motor tax and vehicle registration tax, accounted for 39 per cent of all environment-related taxes.
Taxes on transport fuels accounted for 54 per cent of energy taxes while the combined carbon tax, carbon credits and the public service obligation levy accounted for 41 per cent of energy taxes. Carbon taxes increased by 22 per cent to €807 million.
Transport taxes, mainly vehicle registration and motor taxes, were €1.7 billion with vehicle registration tax accounting for 45 per cent of transport taxes. Pollution and resource taxes generated €18 million.
Estimated environment taxes levied on households were €2.8 billion in 2013, representing a 64 per cent share of total environment taxes. Household environment taxes last year were €2.5 billion, which represented a 56 per cent share of total environment taxes.
Environment taxes levied on service industries were €1.4 billion in 2022, representing a 31 per cent share of total environment taxes.
The reductions in excise duty on fuels were extended until May this year due to the continuing impact of the Ukraine war on fuel prices. The move pushed petrol and diesel prices to their lowest level since September 2021.
However, the cost of petrol and diesel climbed in recent weeks after the Government began to wind back the measures. The excise on a litre of petrol was upped by 5 cent while the price of diesel went up by 6 cent.
Two further excise duty increases will be imposed later this year with one coming into effect at the start of September and a final increase to be imposed in October.
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.
