Revenue warns hikes to fuel taxes will lead to laundering of Agri diesel

Any increase in the excise rate applied to diesel will increase the differential with agricultural diesel and increase the incentive for fuel fraud, the Revenue Commissioners has said.

A number of TDs reacted angrily last week 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 this summer, says it would be prudent to make this change over five years.

The pre-budget paper calls for a year-on-year rise of 2.18c/L for diesel over five years, as a way of discouraging people from buying diesel cars.

According to Revenue, the sales of agricultural diesel (Marked Gas Oil) following a decline remain stable.

This is believed to be due in part to Revenue’s successes in tackling the laundering of agricultural diesel.

In early 2016, Revenue carried out a random sampling programme which tested for the presence of the new marker in road diesel in the storage tanks of around 200, or almost 10%, forecourt retailers.

No samples tested positive for the Accutrace S10 fuel marker.

Revenue says the sampling, which was carried out under the independent supervision of its Statistics and Economics Research Branch, demonstrates that the selling of laundered fuel in the market is negligible and close to being fully eliminated.

Tackling the laundering of agricultural diesel is, and will remain, a priority for Revenue, it says.

However, Revenue has warned that any increase in the excise rate applied to diesel will increase the differential with agricultural diesel and increase the incentive for fuel fraud.

The rate on Agricultural Diesel 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.