Petrol and diesel prices to rise from Friday as Government increases excise duty
Petrol And Diesel Prices To Rise From Friday As Government Increases Excise Duty
Petrol will cost an extra 7 cent per litre, and diesel 5 cent more. Photo: PA
31/08/2023 | 09:25 AM
TOMAS DOHERTY
Irish consumers will be facing higher prices for fuel, hospitality and hairdressers from Friday as the Government increases VAT and excise duty.
The lower 9 per cent VAT rate on hospitality businesses will come to an end, increasing to 13.5 per cent from midnight.
Excise duty on fuel will also increase, meaning petrol will cost an extra 7 cent per litre, and diesel 5 cent more.
There have been calls on Minister for Finance Michael McGrath to reconsider the VAT and excise increases by various industry lobby groups.
The Restaurants Association of Ireland described the move by the Government to increase the VAT rate to 13 per cent as "nonsensical" and "the final nail in the coffin for many small cafes, restaurants and food led pubs."
Chief executive Adrian Cummins said: "The increase is wrong at a time when the country needs to reduce inflation, a VAT increase only adds to inflation. Government need to restore the 9 per cent VAT for food-related hospitality businesses in Budget 2024, and we will be making the case for this when we meet with the Minister for Finance next week."
The Licensed Vintners Association (LVA) said the 9 per cent rate was "at the right level" and the increase would only "add to inflation".
"By moving ahead with the VAT rise, we will effectively see menus changed across the country so the Government can collect additional taxation from the public – heaping further pressure on already hard-pressed consumers," said Donall O’Keeffe, chief executive of the LVA.
Economist Jim Power said the VAT and fuel duty increase on September 1st will add significantly to the cost of living and should have been postponed by the Government.
He told Newstalk radio: "Unfortunately these increases are coming on top of pre-existing price pressures, because we've seen, due to international developments, the price of energy rising in recent weeks, and that's already been reflected in more expensive petrol and diesel at the petrol pumps."
He added: "There is nothing forcing the Government to increase both of those taxes. In the budget, I would expect to see money being directed at the poorest sections of society to help them deal with the cost-of-living crisis that's out there at the moment."
Now consider this:
Bumper Tax Revenues Deliver Exchequer Surplus
THE ECONOMY
/ 2ND JUNE 2022 /
NICK MULCAHY
Government tax revenues year-to-date are running 27% ahead of a year ago, thanks to strong growth in income tax, VAT, corporation tax and wealth taxes.
Ministers pointed out that the annual comparison is flattered by the stringent trading lockdown in the opening months of 2021.
Income tax receipts to end-May 2022 from the start of the year amounted to €11.9 billion, up 17% on an annual basis.
VAT receipts were €9.0 billion, up 29% year-on-year for the five-month period. VAT receipts are boosted by the impact of tax warehousing last year and the standard rate of VAT was also lower in the opening months of 2021. VAT receipts were 23% cent higher than in the same period in 2019 (pre-pandemic).
At €2.1 billion to end-May, excise duty receipts were also up 2% on an annual basis.
BUSINESS BULLETIN
Corporation tax receipts were €2.3 billion higher in the period at €5.2 billion to end-May.
Total gross voted expenditure to end-May amounted to €31.8 billion, 3.5% below the same period in 2021, as a result of the unwinding of Covid-19 supports.
As a result, an Exchequer surplus of €1.4 billion was recorded to end-May compared with a €6 billion deficit a year ago.
On a 12-month rolling basis – which ministers say is a better measure of underlying trends – the Exchequer accounts were in balance in May.
SOURCE: DEPARTMENT OF FINANCE
Peter Vale, tax partner in Grant Thornton, commented: “May is a ‘VAT month’, with strong receipts reflecting robust consumer spending, including online purchases. While inflation plays a part in the strong returns, it's also clear that so far the crisis in the Ukraine, or the risk of substantial interest rate hikes, has not had a significant impact on consumer confidence.
“May is normally the first key month for corporation tax returns. However returns this year have already been exceptional. With more pessimistic economic forecasts for the rest of 2022, we may see a dip in corporate tax revenues next month, as lower profit projections will impact on preliminary tax payments in June and later months of the year.
"Overall, while May was yet another good month for the Exchequer, there will be nervousness regarding the impact of a global slowdown on tax receipts for the remainder of the year, in particular corporation tax returns."
Tom Woods, Head of Tax at KPMG, said that the “extraordinary performance” of corporation tax, income tax and VAT is not surprising given the strength of the ICT sector and the buoyancy of the labour market.
“However, we need to be conscious of the dual nature of the Irish economy whereby the domestic economy is likely to feel the full impact of inflationary pressures in the coming months,” Woods added.
Finance minister Paschal Donohoe (pictured) said underlying tax trends are a good signal of the continued momentum in the domestic economy.
"However, given global inflationary pressures, monetary policy will become less accommodative going forward,” he added.
“Indeed, we can no longer assume that the highly favourable interest rate environment that has prevailed recently will continue. What is clear is that the higher our level of public debt, the more severe the implications of any rise in borrowing costs will be. We also know that our prospects for affordable borrowing costs are improved with careful management of the public finances.
"It is crucial that we use the strong momentum in the public finances to rebuild and reinforce our fiscal buffers so that we retain our ability to swiftly and effectively respond to future shocks. There are many challenges to meet, but there are also opportunities to seize if we make the right decisions now."
The Minister for Public Expenditure and Reform Michael McGrath stated: “Total gross voted expenditure to end-May 2022 amounted to almost €32 billion, with nearly €30 billion of this related to current expenditure. This reflects the government’s continued commitment to the delivery of public services and investment in infrastructure.
"Pressures are continuing in relation to the provision of Covid-related supports in certain sectors, pressures are emerging related to the humanitarian response to the war in Ukraine, and the recent increases in the cost of living.
“Over the coming weeks I, with my colleague the Minister for Finance, will consider how to manage the dual challenge of supporting our economy and investing in our public services whilst ensuring the public finances remain on a sustainable trajectory.”
And this:Irish Banks Make Huge Profits By Short-Changing Savers
FINANCIAL SERVICES
/ 6TH AUGUST 2023 /
BILL TYSON
Irish banks raked in €1.75bn in extra cash in just six months. AIB, Bank of Ireland and PTSB earned a total of nearly €4bn in profits in the first half of 2023 due to the huge gap between what they earn with your money and what they pay you for it in interest.
AIB earned €1,772m in net interest income in H1 2023, up by €877m on last year. Bank of Ireland raked in €1,802m during the first six months of 2023, €730m more than H1 2022. And even smallish PTSB got in on the act with €298m in net interest income, 92% more than last year.
This was all revealed in the banks’ just released half-year reports. The reason behind their bloated profits is simple: Interest rates have risen by 4.25% in a whirlwind of hikes that have left borrowers reeling, and hardly any of this has been passed on to savers.
Take Bank of Ireland, for example. It can make over €1bn in annual interest just by keeping €29bn of our money with the European Central Bank.
This pays out nearly 4% after nine successive interest rate hikes. Yet Bank of Ireland passed on none of these rate increases to the vast majority of its customers' accounts.
The bank still pays us a big fat zero percent on demand deposit accounts. PTSB's 0.01% and AIB's 0.1% corresponding rates aren't much better. Meanwhile, inflation is gobbling up the value of our savings by 5.4%.
Some of the jump in profits of the three remaining Irish banks in the first half of this year is down to their business growing with the carve-up of departing KBC and Ulster Bank. Yet, even allowing for the increase in overall business, interest income still rose hugely.
Net interest margins in the three banks soared from as little as 1.2% to nearly 3%, though on this basis PTSB seems slightly less greedy than the other two.
Irish savers are losing billions as their savings languish in accounts paying practically no interest. An extraordinary €141bn (over 90% of all money on deposit) is in overnight deposit accounts earning on average just 0.03%. That's five times less than the average euro area rate.
“Banks currently hold an unusually large share of overnight deposits by historical standards,” finance minister Michael McGrath stated recently in the Dáil.
Irish banks point out that they protected savers from negative interest rates charged by the ECB over eight years and they have not passed on the full brunt of ECB hikes to mortgage holders.
We were also informed by a spokesperson for AIB that “in light of the evolving interest rate environment, we continue to keep our rates under review”.
Why do we still accept some of the worst savings rates in the EU? Well, we don't have to. Raisin.ie deserves an EU medal for service to the European ideal as it brings together the best rates across the Eurozone. And boy do they put Irish rates to shame.
The best rates on Raisin are: Banco Português de Gestâo 3.6% 1 year; BFF (Italy) 3.5% 6 months; BFF 3% 3 months. All savings products listed on Raisin.ie are protected up to an equivalent of €100,000 per depositor and bank according to EU laws.
Regular savings accounts pay higher interest because their very nature means you can't put much money in - at least not for a while. AIB and BoI pay 2%.
Commitment-phobes may balk at the 10-year part of the terms for National Savings Bond. With An Post's products, there are no massive penalties for getting out earlier. It just means you get a lower interest rate than the headline amount, which is 1.5% a year.
Crucially, you still get some interest (0.59% per year if you encash in year 5 for example). And that's still way better than what you'd get on demand. An Post's savings products are tax-free.
Banks also pay more for longer-term money, but you probably can't make withdrawals (depending on the terms) and you do have to pay tax. Agreeing to lock your money for two years will get you 2% a year with BoI, for example.
Online bank BUNQ pays 1.56% on demand, which isn't great, but if you need instant access to your money it's way better than the Irish banks.
Photo: AIB chief executive Colin Hunt (left) with CFO Donal Galvin . (Pic: Shane O'Neill, Coalesce)
