Relief as planned excise duty increases paused

Motorists are welcoming the expected extension of excise duty cuts on fuel as some retailers predict diesel prices could hit €2 a litre at the pumps by the weekend.

A phased return of excise duty rates had been due to take place in four stages, beginning on September 1, with a nine cent per litre increase in petrol and 10 cent per litre rise in diesel.

The Dáil has been recalled early - for one day tomorrow (Friday) - to approve the extension to excise duty cuts, introduced in response to the impact of the Middle East conflict on oil prices and April’s nationwide fuel protests.On Friday, the Government confirmed that, following discussions between the Taoiseach, Tánaiste and Minister of State Seán Canney, the increases for September and October will not now proceed in light of changing global circumstances and increased fuel prices.

Cavan Town Fuel Retailer Padraic Rudden believes the pause is “good” but asks: “Will it be good enough?”

“It’s [the price of fuel] only going one way, it’s going up,” he told this newspaper.

Fuel is priced daily, so when Padraic purchased fuel last week, the cost went up 1c or 1.5c every day.

While the cost price of fuel increased by half a cent on Monday, Padraic predicts if this trajectory continues this week, the price per litre of diesel will be €2 by the weekend or early next week.

“I hear talk about going out to protest again but I suppose the government can’t do much more, they’re taking it down a right bit already.” He suggests that they could decrease the amount of VAT taken on fuel, and describes how the government has received between 10-12c “extra” per litre in VAT over the past two months as a result of rising costs.

“Every time fuel goes up 10 cent, the government gets 2.3 cent in VAT,” he explains, as VAT is calculated as a percentage. However, the Government is bound by strict EU VAT rules on motor fuels and is currently charged at a standard 23% on petrol and diesel. Padraic acknowledged: “To be fair [to the Government], none of this is caused by what’s happening in Ireland, it’s all from outside of Ireland.” Minister of State Niamh Smyth said the decision to pause the phased increases in excise duty on fuel recognises the continued pressure being experienced by families, commuters, farmers and businesses.

“In counties like Cavan and Monaghan, many people rely on their cars every day to get to work, school, healthcare appointments and other essential services. Maintaining supports at the petrol and diesel pumps will make a real difference to families and workers who have little alternative to private transport,” she said.

The Minister also highlighted the importance of the measure for local farmers, hauliers, contractors and small businesses. “Our farming community and rural enterprises have been dealing with increased operating costs for some time. Keeping fuel prices as manageable as possible is important for protecting jobs, supporting local businesses and maintaining economic activity throughout rural Ireland.”

Looking ahead, Minister Smyth said the Government remains focused on delivering further cost-of-living supports through Budget 2027.