Dáil Éireann debate -
Wednesday, 28 Jan 1998

Vol. 486 No. 1

Written Answers. - VAT on Utilities.

Noel Ahern

Question:

514 Mr. N. Ahern asked the Minister for Finance the varying VAT rates which apply to services provided to householders by the various utilities including Telecom Éireann, ESB and Bord Gáis; the reason VAT rates are not similar for all utilities; and if he will make a statement on the matter. [1754/98]

Minister for Finance (Mr. McCreevy):

Gas and electricity services are taxed at the reduced VAT rate of 12.5 per cent.

The reduced rate applies to fuel generally, including not just electricity and gas for heating and lighting but also solid fuels such as coal, peat and the like, as well as hydrocarbon oil for domestic and industrial heating. In this regard, Ireland avails of certain options for reduced rating contained in EU VAT law.

I should mention that, in the case of electricity supplied to domestic consumers, the ESB absorbs 5 per cent of the VAT charged with the effect that these consumers pay only 7.5 per cent.

Telecommunications services are taxed at the standard rate of VAT which in Ireland is 21 per cent. The standard rate applies generally to such services within the European Union.

Finally, I should point out that where pensioners and others are in receipt of free allowances for gas, electricity and telephones, the VAT due on the supplies is borne by the Department of Social, Community and Family Affairs.