Diesel prices may be on the rise

An increase in the excise duty on diesel, to equalise it with petrol is part of a pre-budget proposal writes Geraldine Herbert. Geraldine Herbert. Motoring Journalist As the government plans to abolish or phase out the universal social charge (USC) in next month’s budget new ways to plug the €4Bn per annum plus deficit are being proposed. The inter-departmental tax strategy group of civil servants and political advisors have been given a mandate to consider raising other taxes with a view to making up the shortfall.  Their Climate change paper considers a range of options that would directly affect the motor trade and consumers if implemented, one of their proposals likely to have an immediate effect is to increase the excise duty charged on diesel so it would be on parity with petrol. Currently the excise duty paid on petrol is 22% (11 cent) higher than it is on diesel.  The proposal, if implemented, would see the price of a litre of diesel brought into line with the price of a litre of petrol over a five-year period.  The UK has already has equalised excise rates on petrol and diesel and a number of countries, notably France and Belgium, have also moved to equalise the excise rate on both. Rising Fuel Costs The high number of diesel vehicles, particularly in cities, is giving rise to health concerns due to the implications of higher NOX (nitric oxide and nitrogen dioxide), sulphur oxide and particle matter emissions associated with these vehicles.  The World Health Organisation estimate that air pollution causes 7 million premature deaths annually as well as impacting negatively on the lives of many more.  A number of cities are moving to ban diesel engine vehicles from within their boundaries, London, Paris and a number of German cities among them. Diesel has been the fuel of choice for many Irish drivers over the past number of years.  Sold on the environmental benefits of low levels of CO 2 as well as the consequent improvement in fuel economy, such is their appeal that they now make up more than 75% of cars on our roads.  According to the CSO, 70% of the 119,952 new cars taxed between January and July had diesel engines. But our love affair with diesel didn’t start by chance.  The current situation is the result of changes made to the Motor Tax system that was intended to lower carbon emissions by pushing people towards diesel. Change in VRT and Motor Tax resulted in improved performance of diesel cars In 2008, the Fianna Fáil-Green Party coalition changed the VRT and motor tax system from one based on engine capacity to the current one based on CO 2 emissions.  As a result of this change and huge improvements in the performance of diesel cars, sales dramatically shifted in favour of diesel and the percentage of new petrol cars fell from 70% in 2007 to 32% by the end of 2009. This bid to reduce CO 2 emissions also had a disastrous impact on the prices of older cars, stuck with the old, higher tax rates. Motorists are sensitive to fuel prices and may well feel aggrieved at this proposal. In addition, as the motor industry finally recovers and sales reach a sustainable level any move that could negatively impact car sales may have far reaching consequences. Given the immediate health concerns of diesel emissions, the decision to prioritise reduced carbon emissions and increasing health problems by incentivising diesel was a misguided one. Currently car manufacturer’s figures for diesel pollution are unreliable, as are all of the emission figures due to the inadequacy of the European testing procedures that are outmoded and no longer fit for purpose. However the EU has agreed that new cars will have to be tested both in the laboratory and on the road from next September. The WLTP (Worldwide Harmonised Light Vehicles Test Procedure) will reflect much more closely normal daily driving conditions so when motorists, governments and regulators have more accurate information then decisions can be made on how its best to respond to the immediate health concern posed by Nox emissions. In the meantime the government should be concentrating on reducing air pollution levels in the long term rather than utilising excise increases to garner a short-term fix to their USC deficit. #Motor #MotorIndustry