Proposals to raise the price of diesel labelled ‘outrageous’

A number of TDs have reacted angrily to proposals to raise the price of diesel to bring it in line with the price of petrol.

It is understood that the Government Tax Strategy Group’s report says Minister for Transport Shane Ross has requested the equalisation of the rates for climate policy reasons.

The paper, which was published last month, says it would be prudent to make this change over five years.

According to Roscommon- Galway Independent TD Michael Fitzmaurice, the move must be resisted as it would have a major detrimental effect on the economy and the lives of hundreds of thousands of people.

The proposals which would see the price of a litre of diesel being brought into line with the price of a litre of petrol over a four to five year period would be disastrous for the Irish economy and it must be strongly resisted.

“Any such proposal would see the price of diesel rise by 12 to 15c/L and would affect hundreds of thousands of people who depend on their cars and vans to travel to work for a start.

“Tens of thousands of businesses such as haulage and other firms would be in danger of going out of existence and these firms are already under pressure with insurance and other costs spiralling out of control.

“This week we heard that there are two million people at work in the economy. Many of those people will be out of a job again if this proposal becomes a reality,” he said.

Also Read: Government to hike up price of diesel in October budget

Meanwhile, Kerry TD Michael Healy-Rae said the proposal would place an enormous burden on people using diesel, dramatically increase the cost of living and would have an extremely negative impact in our country.

He said he would be raising the matter this matter in the Dáil with the Minister for Finance Michael Noonan.

“I believe that any proposal even over a three or four year period to equalise the duty rates would have to be resisted strongly by all politicians,” he said.

As yet it is unclear whether green diesel will be affected by the government move it has historically been subject to a lower rate of excise duty than petrol or auto-diesel.

This rate has been unchanged at just over 4.7c/L since 1988. As a consequence, the price of green diesel is substantially lower than the price of petrol or auto-diesel.

It follows that the percentage increase in prices resulting from the carbon tax is higher in the case of green diesel than it is for the other two fuels.

As price takers, farmers will be unable to offset the increases in production costs associated with a potential tax hike by increasing the price of the output they produce. As a result, such a tax increase will reduce farm profitability.