The continuation of fuel excise cuts, to be approved by the Dáil next Friday, will not affect the forthcoming budget. Costs associated with maintaining excise cuts on petrol and diesel have been estimated at about €100 million a month, according to sources familiar with recent discussions among Coalition leaders.
Ceann Comhairle Verona Murphy notified TDs on Friday that the Dáil would meet next Friday at noon on foot of a request from the Taoiseach.
It is expected that the resolution, to be voted on by TDs after being tabled by Minister for Finance Simon Harris, will pause the planned reversal of cuts to excise on petrol and diesel.
From September 1st, the price of a litre of petrol was due to increase by 9 cent, with diesel going up by 10 cent. On October 1st, both were then due to increase by 8 cent a litre. The planned increases are now expected to be paused.
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No decision has been made on the possibility of petrol and diesel prices going up in November and December. However, according to Government sources, the reversal of excise cuts – which were introduced in the spring – is still expected later in the year. This is dependant on global fuel prices dropping.
A review of pricing is likely before any future reversals, with €2 per litre seen as a tipping point. There is general agreement among Ministers that the Government could not be responsible for bringing the price of petrol or diesel above €2 per litre.
With prices for diesel currently in the low €1.90s on forecourts, the now-paused reversal of excise cuts next week would have brought the price above €2 per litre.
This is the second postponement of the fuel-price increase, following a similar decision in June to extend the cuts beyond August 1st.
Ministers have been wary of the potential for a repeat of the fuel protests that brought parts of the country to a standstill in April. They are also conscious of the impact of rising prices at a time when families are squeezed by back-to-school costs.
The total cost of the excise cuts is estimated by Revenue Commissioners to be running at about €100 million per month. The income foregone to the Exchequer will have no effect on the size of the budget planned for early October, sources involved in the process have confirmed. That will remain at €8.5 billion, with €1.5 billion earmarked for tax-reduction measures. This is likely to be focused on a personal tax package.
Instead, costs generated by excise cuts will be met by reducing the surplus that the Government plans to run this year.
Yesterday, Minister for Enterprise Peter Burke said that while the excise-cut reversal would not go ahead as planned, “they can’t go on indefinitely, I think we’re all agreed on that”.
He acknowledged that if the Government enacted a measure that pushed petrol and diesel prices over the €2-per-litre mark, it “would be very significant and would cause very significant distress on families”.
Speaking to RTÉ’s This Week programme, Burke added that helping families with cost-of-living pressures would be a key focus for the budget.
