Drivers from Northern Ireland crossing the border to the Republic of Ireland for cheaper fuel are costing the Exchequer just over £200m a year, according to a study commissioned by the Irish tax authority.

The study into “fuel tourism” reported that fuel prices in the Republic were lower than in the UK because of lower fuel excise rates.

For petrol the excise rate in the Republic of Ireland was almost 13% lower in July 2016, and that for diesel was almost 30% lower. Value Added Tax (VAT) is lower in the UK (20%) than in the Republic (23%), but that still leaves a significant premium on UK fuel prices.

The study compared the sales of petrol filling stations (PFSs) near the border, with the average across the whole republic and found the PFSs near the border had higher average petrol and diesel sales by 14.6% and 54.4% respectively.

The authors of the report concluded: “Given that the set of stations near the border sell an average of 54% and 15% more diesel and petrol compared to stations far from the border, this suggests that the border stations as a whole sell an additional 408klpa in diesel and 34kpa in petrol, beyond what they might otherwise sell if they were not close to the border.

“Assuming the same ratios of tax (Excise, Carbon and VAT) per kilolitre sold, the overall annual tax contribution of fuel tourism is €28m for petrol and €202m for diesel – based on 2015 receipts levels.”