THE GOVERNMENT has rejected a Fianna Fáil motion calling for excise duties on petrol and auto diesel to be cut by 4 cent.

Minister of State for Small Business John Perry said it would cost the exchequer €178 million in a full year. He said this loss of revenue “would have a negative impact on the performance of our public finances, which is vital to our economic wellbeing and to our exiting the EU-IMF programme”.

But Fianna Fáil finance spokesman Michael McGrath said it was “absolute rubbish” that the fuel cut would cost the State €145 million this year, “because people would spend the money in other areas of the economy”. The reason the Government was so unpopular with the electorate was because “you are not prepared to respond to the needs of citizens”, he said.

The party’s spokesman on small business, John McGuinness, said it had taken less than a year for the Government to “become the glove puppets” of civil servants.

Introducing the Private Members’ Bill the party’s transport spokesman, Timmy Dooley, said an instant reduction at the pumps would make a significant impact on household budgets.

There had been a 70 per cent increase in diesel and petrol prices in recent years to €1.649 a litre for petrol and €1.599 for diesel.

Mr Dooley said 54 per cent of the cost of petrol and almost 50 per cent of the cost of diesel accrued to the State. He acknowledged “this has been one of the old reliables for successive governments,” but “the current price of oil is unsustainable and is creating an unsustainable burden on this economy and the people in it”.

Minister for Finance Michael Noonan had accused Fianna Fáil of living in an “economic dream land” because of the party’s call for a cut in fuel taxes. But Mr Dooley said the Minister “should be careful of accusing others of losing touch with reality at a time when his Government is heaping new charges upon families and is apparently clueless about the effect this is having on people”.

He said Mr Noonan had last week said “people adjust their spending patterns in other sectors of the economy depending on the price of fuel”. The Clare TD agreed and said “a modest reduction in the cost of fuel would result in a €145 million stimulus”.

FUEL COSTS

Less than three months ago, the same website put the average price of a litre of petrol at €1.55. In July 2008 when oil on international markets peaked at $147, the average price of a litre of petrol here cost €1.36, 34 cent less than today.

The biggest driver of higher fuel prices in recent months has been Government taxes. Since the emergency budget in late 2008, there have been five tax increases, including increases in VAT, the introduction of carbon tax and three excise duty hikes. These have added 21 cent to the price of a litre of fuel.

Another key element in rising prices is the falling euro. Last summer the euro was trading at about $1.43; today it is worth about $1.27. As oil is traded in dollars, this has added several cent to the price of a litre of fuel. -

CONOR POPE