Dáil Éireann Debate, Thursday - 26 March 2026
212. Deputy Ken O'Flynn asked the Tánaiste and Minister for Finance to detail the modelling undertaken by his Department on the expected reduction in average pump prices resulting from the proposed excise duty cut, including the assumed pass-through rate to consumers. [23349/26]
Amharc ar fhreagra213. Deputy Ken O'Flynn asked the Tánaiste and Minister for Finance the alternative policy options considered by his Department to reduce fuel costs for households and businesses, including reductions in VAT on fuel, targeted rebates, or broader excise adjustments, and the estimated cost of each option. [23350/26]
Amharc ar fhreagra214. Deputy Ken O'Flynn asked the Tánaiste and Minister for Finance the rationale for limiting the proposed excise reduction to a temporary and defined period, and whether longer-duration or scalable measures were considered in light of ongoing volatility in global oil markets. [23351/26]
Amharc ar fhreagraI propose to take Questions Nos. 212, 213 and 214 together.
Policy options in regard to support measures must have due regard to EU legislative frameworks. With regard to financial support measures to ease energy price inflation this framework includes the EU Energy Tax Directive, the EU VAT Directive and the General Block Exemption Regulation (GBER) which governs State Aid measures.
Under the ETD, Member States must comply with the minimum rates for certain fuels and fuel uses. While it is possible to reduce excise on certain fuels and fuel uses, the minimum rates under the ETD must be respected.
For diesel used as a propellant, the minimum rate as set out in the ETD is 33 cents per litre exclusive of VAT. The minimum rate on petrol as per the Energy Tax Directive is approximately 36 cents exclusive of VAT.
As regards the EU VAT Directive, this provides that all goods and services are liable to VAT at the standard rate, unless they fall within the categories of goods and services specified in Annex III of the VAT Directive, in respect of which Member States may apply a lower rate of VAT. Motor fuels, such as petrol and auto-diesel, are not included in the categories of goods and services on which the EU Directive allows a lower rate of VAT or an exemption to be applied, and so they are liable to VAT at the standard rate, currently 23%.
EU State Aid rules as set out in the GBER must also be observed as regards targeted supports for industry.
As announced on 24 March 2026, Government has introduced temporary and targeted measures to reduce fuel prices for households and businesses, with additional supports for key sectors of the Irish economy.
These measures provide for temporary reductions in the rates of Mineral Oil Tax (MOT) applying to petrol, auto diesel and Marked Gas Oil (MGO), taking effect from midnight tonight until 31 May 2026.
The rate of MOT will be reduced on a VAT inclusive basis by:
• 15 cent per litre for petrol,
• 20 cent per litre for auto diesel, and
• 3 cent per litre for MGO.
To provide targeted relief to haulage and bus passenger operators, the Government will increase the maximum repayment allowable under the Diesel Rebate Scheme, from 7.5 cent up to 12 cent per litre of diesel. This will apply to diesel purchased from 1 January 2026 until 30 June 2026.
To further ease the financial impact of energy price inflation, the Government will reduce the NORA levy from 2 cent per litre to a nominal amount for a period of two months.
When the excise reductions in petrol and diesel are combined with the changes to the NORA levy, we expect the pass-through rate to be a 22 cent reduction in a litre of diesel and a 17 cent reduction in a litre of petrol, with a 5 cent reduction in the price of MGO.
However, it should be noted that the price of fuel is determined by a number of factors including the wholesale market price, international market dynamics, international exchange rates impacts, distributional costs, and retail pricing policy, as well as taxation.
In order to further support households, the fuel allowance season will be extended by an additional four weeks. This means that the 470,000 households in receipt of the fuel allowance will receive additional financial support of €38 per week, totalling €152.
The measures are concrete actions to help and support families, working people and business with the real and rising cost of fuel and energy.
These supports will be in place for a defined period of time. It is important that we remain nimble, agile and flexible in relation to any set of measures. It is entirely possible that what seem like the appropriate economic measures today may not be appropriate in the weeks and months ahead.
