herald

Wednesday 22 November 2017

Petrol soars to new high after VAT hike

RECORD: Ministers under fire as price of litre hits 154.9c

PETROL and diesel prices have hit record highs in the wake of increased VAT rates.

The Government decision to pump up taxes from January has left motorists feeling drained.

The cost of petrol has risen to an average of 154.9c per litre -- a 7c increase in the space of just one month.

Diesel has also soared to a record high, with drivers being asked to pay an average of 153.1c per litre -- an increase of 6.2c since December.

Part of the increase can be directly attributed to the VAT rise which saw the rate hiked from 21pc to 23pc.

The rest is due to the value of the euro weakening against the dollar and to increases in wholesale prices on European markets.

The increases come on top of a 1.4c per litre rise in the price of petrol and a 1.6c per litre hike in the price of diesel after December's Budget.

AA Ireland has accused the Government of scoring an "own goal" and making a bad situation for motorists even worse.

"It was a policy of the last Government (increasing prices), it was wrong then and it's still wrong now," AA Ireland's Conor Faughnan said.

"In terms of its practical effect, it sucks money out of the pockets of ordinary families and the more it does that, the more damage it does to the economy. Ultimately, it ends up costing the Exchequer money rather than making it.

"In 2011 the total amount of fuel sold in the country was down by about 6 or 7pc in response to rising prices. That means the Exchequer take is also down.

"When you look at the net effect of that policy, it is to reduce trade, to reduce VAT receipts, to reduce sales and ultimately the Government is collecting less money, not more."

The AA is just one of a series of groups that have lined up in recent weeks to criticise the VAT increase.

Last night, a senior Government spokesman conceded that the VAT increase is having a negative effect on consumers.

And a spokesman for Transport Minster Leo Varadkar said the minister accepted that the cost of living would be affected by the VAT increase.

kdoyle@herald.ie

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