The decision to hold off on planned fuel excise duty increases is going to come at a serious cost to the State, Enterprise Minister Peter Burke has admitted.
Burke confirmed that pausing the scheduled hikes would leave a notable gap in government finances, though he stopped short of putting a precise figure on exactly how much revenue would be lost. The acknowledgement comes as the government faces ongoing pressure to keep living costs manageable for ordinary households still feeling the squeeze from years of elevated inflation.
Fuel excise duties had been due to rise as part of a gradual schedule of increases that were originally pushed back during the energy crisis that followed the war in Ukraine. Prices at the pump spiked sharply in 2022 and into 2023, forcing the government at the time to temporarily cut excise duty to give drivers some relief. The plan was always to phase those cuts back out and restore duties to their original levels over time.
But with cost of living concerns still front and centre for many voters, there has been significant political reluctance to follow through on those restoration plans. Keeping the freeze in place means motorists avoid another hit at the forecourt, but it also means the exchequer misses out on revenue it had been counting on.
Burke acknowledged the trade-off directly, saying the cost of not proceeding is significant. It is a frank admission that the government is essentially choosing to absorb a financial hit rather than risk the political and public backlash that would come from pushing ahead with the increases.
The timing is particularly sensitive. With a cost of living crisis that has stretched household budgets across the country over recent years, any move that could push fuel prices higher tends to get a rough reception. Petrol and diesel costs affect almost everything, from the daily commute to the price of groceries and goods transported around the country.
Environmental groups have long argued that fuel excise duties should be restored and even increased beyond their original levels as part of Ireland’s climate commitments. Higher fuel costs, the argument goes, encourage people to shift toward public transport, cycling, or electric vehicles. Keeping duties artificially low, critics say, sends the wrong signal at a time when the country is trying to cut carbon emissions.
On the other side, rural communities and those without access to reliable public transport have consistently pushed back against any fuel price increases. For many people living outside major urban centres, a car is not a luxury but a necessity, and higher fuel costs represent a direct hit to weekly budgets with no easy alternative available.
The government has been trying to walk that line for several years now, delaying the excise restoration repeatedly rather than committing to either fully scrapping it or pushing ahead. Each delay costs money, and those costs are starting to add up.
Burke’s comments suggest the government is well aware of the financial reality but is prioritising household pressures over exchequer returns for now. Whether that position holds as budgetary pressures mount in the coming months remains to be seen. With Budget 2026 preparations already beginning to take shape behind the scenes, decisions around fuel duty will likely be back on the table before long.