Consumers facing double hit of Vat and fuel price increases
Petrol Leah Farrell/ Rates Ie Diesel And Excise Overnight Litre Rose Rollingnews By Per By Picture: 5c 7c
Consumers are facing a double hit of cost increases as petrol and diesel prices rise and Vat rates return to pre-covid levels in hotels, bars, and restaurants.
Petrol excise rates rose by 7 cents per litre overnight, diesel prices increased by 5 cents, and agricultural diesel went up 1 cent.
The increase is the second of three planned tax increases on motor fuel, aimed at reversing cuts made in 2022 when global oil prices soared after Russia’s invasion of Ukraine.
The third excise increase, set for October 31, will see the price of petrol rise by a further 8 cents per litre, and the price of diesel rise by 6 cents per litre.
At the pumps, fuel costs will likely exceed €1.90 per litre and could climb as high as €2 again, experts have warned.
The reduced 9% Vat rate for the hospitality and tourism sector — a measure extended to help businesses through the pandemic — has also ended, returning to 13.5%.
comes as figures show the price of hotel rooms across the country has already jumped more than 14% in the past year.
The latest data from Fáilte Ireland shows the average daily room rate for hotels has reached €174.65.
The latest tax increases will heap further pressure on consumers already struggling with the cost of groceries, energy, and insurance.
The Society of St Vincent de Paul (SVP) has received more than 135,000 calls this year from people seeking help with rising food and energy costs — a 14% increase from last year.
"Food and energy prices are still driving calls to the organisation," SVP's Dr Tricia Keilthy said.
The Consumer Association of Ireland (CAI) said the Government should have suspended the imposition of the fuel and Vat increases.
“People can't take any more,” said CAI chairperson Michael Kilcoyne.
The Restaurants Association of Ireland (RAI) said the “nonsensical” return to the 13.5% Vat rate would be the "final nail in the coffin for many small cafes, restaurants, and food-led pubs".
RAI chief executive Adrian Cummins said the increase would “erode Ireland’s competitiveness as a tourist destination".
The Vintners' Federation of Ireland, meanwhile, called the 4.5% Vat increase a “short-sighted tax on the consumer", while the Licensed Vintners Association said the Exchequer is in such a strong position, there was “no reason" why the 9% Vat rate on food could not have been maintained.
Earlier this week, VHI announced an average increase of 7% in health insurance premiums, while Irish Life and Laya Healthcare also announced hikes recently.
The Central Statistics Office has reported an unexpected increase in headline inflation, with prices rising by 4.9% across the board on an annual basis.
Backbench Fine Gael TD Michael Ring said the fuel and Vat increases will see more tax paid to the Exchequer when the State does not need more revenue, but people need relief.
“It’s outrageous that the price of fuel will go back up again when interest rates have gone up and the cost of food remains high,” Mr Ring said.
Fianna Fáil TD Willie O’Dea said it would be difficult for the Government to justify increasing “indirect taxes” given the surplus in the State’s finances.
The Department of Finance, however, said that Minister Michael McGrath will seek to ease the cost of living in October's budget.
"Minister McGrath has said recently that there will be a set of measures in Budget 2024 that will be temporary or one-off in nature as well as universal and targeted measures to assist individuals and businesses with cost-of-living pressures."