‘Alter fuel tax? We’ll see impact of Brexit f irst’

‘Agreed on carbon tax hike’

MINISTER for Finance Paschal Donohoe has said the Government will have to monitor the impact of Brexit on hauliers before making decisions on taxing petrol and diesel equally.

Ireland is under pressure to introduce ‘equalisation’ of excise duties, with the EU describing our lower tax on diesel as ‘environmentally unjustifiable’.

Diesel is considered more damaging environmentally and on human health.

However, the Finance Minister has suggested a cautious approach to any changes. He said he favoured slowly bringing tax on petrol and diesel into line, while ensuring the change did not hit diesel-dependent road hauliers too badly.

In a pre-Budget submission paper, Mr Donohoe wrote: ‘I like the approach of suggesting a path to equalisation of diesel and combining that with signalling of a diesel rebate scheme for haulage. Any decisions on equalisation have to be seen in the light of trade disruption that could be triggered by Brexit.’

The submission said equalising taxes could lead to increased fuel laundering and higher commuting costs, and encourage people to fill up in the North. Mr Donohoe also said he was in favour of a hike on carbon tax, which remains unchanged since 2012.

The submission by officials at the Department of Finance said raising the tax by €5 a tonne would yield an extra €110million a year.

In his notes on the submission, Mr Donohoe said he was ‘agreed on carbon tax increase’. However, the tax was left alone in Budget 2018. It is the subject of a review by the Minister’s officials and the ESRI for this year’s budget.

In a statement, the Department of Finance said: ‘The energy and environmental taxation submission presented a variety of policy options aimed at assisting the development of the environmental rationale around energy and environment tax, as well as potentially raising revenue for the State.

‘The Minister must balance what is best for the economy and the whole of society.’