“Not removing tax and VAT will drive inflation through the roof and drive the country head-on into a deep, dark recession that will make the 1980s look like a holiday.”
That is the stark warning Verona Murphy, Independent TD, issued yesterday (Wednesday, March 9th), as she reacted to the government’s move to temporarily reduce excise duties on petrol, diesel and marked gas oil.
Tax
During Leaders’ Questions, Murphy told An Taoiseach, Micheál Martin, that not removing the taxes is “a measure we will all live to regret”.
She said: “Not doing so will increase the cost of the food the government wants farmers to produce up in the heavens and add to the cost of tractor fuel.”
“Two cent a litre is a joke, but farmers are not laughing. It is time to get real. People will not be able to afford to go to work.”
“They will draw the dole because they will not have to pay the extra for their children to go to school on the bus. They go free.”
The TD warned that the Dáil that “the pump price could go to €3.50/L”.
She then went on to outline the composition of the price of a litre of fuel yesterday morning.
While she acknowledged that it might vary around the country, the diesel pump price that she was provided was €1.899. She acknowledged that it may be higher in certain parts of the country during her speech.
“The government tax take is 96.58 cent, which is 50.86%. Taxes applied include excise duty, carbon tax and the National Oil Reserves Agency, NORA, levy.”
“The actual pump price for petrol this morning is €1.922, which also may be higher in parts of the country.”
She said that all government duties include:
- Excise duty;
- Carbon tax;
- The NORA levy.
Fuel prices
Continuing, she said: “The actual price per litre without those duties, which add 55.23%, is €1.0653. VAT is actually applied to the aforementioned taxes at 23%. Is that not right?”
She said that VAT is applied to excise at 23% and then onto the base price as well. Then, she explained that the 23% is added to the carbon tax, the NORA levy and excise duty. “The government should not be doing that,” she stressed.
Murphy added that the reductions the Taoiseach reported are not reductions at all. She said, “it is the equivalent of the tax on tax” because the tax that is on the tax on a litre of petrol is actually 20c.
“That is the tax that is on the excise. That is the 20c reduction we are supposed to be getting. The tax on the tax on a litre of diesel is 18c.”
“Therefore, the Taoiseach has 3c to play around with, but he is trying to tell the people that he is doing them a favour. I just cannot believe it.”
“It is time to be honest with the people, and it is time to be transparent.”
She claimed that the government is adding tax on tax at a time when the “most vulnerable and marginalised income earners in this country are choosing between heating and eating”.
She claims that the government is adding VAT to excise duty, VAT to carbon tax and VAT to the NORA levy at a rate of 23% on petrol and diesel.
Remove all excise duties and VAT
Concluding, Murphy called on the Taoiseach to temporarily remove all excise duties and VAT on fuel.
“He should apply it now to our tax rate and save the rural people who cannot afford to go to work,” Murphy added.
Martin said that it is “not possible to remove all excise duty as the deputy suggested.
He said that revenue generated across the economy, be it income tax, VAT or whatever, is used to invest in education, health, social protection and “across the board”.
