Trevor Sargent
Question:214 Mr. Sargent asked the Minister for Finance if he will reduce the rate of VAT on the installation of solar panels from 17.5% to 5%. [30712/01]
Written Answers. - Tax Code.
I should initially explain to the Deputy that there is no VAT rate of 17.5% in this State and that rate is the standard rate of VAT in the United Kingdom. In general the rate of VAT applying to the commercial installation of solar panels in this State is 12.5%. Solar panels purchased and installed by an individual are subject to the standard rate of VAT at 20%.
Under the EU Sixth VAT Directive, with which Irish VAT law must comply, it would not be possible to introduce a 5% rate which would apply to the widespread installation of solar panels for all interested parties. In any event, such a change would require the introduction of a new reduced rate and there would be pressure to extend the rate to other goods and services covered by the relevant section of the Directive. I am concerned that this would in time lead to a reduction of the Exchequer revenue from VAT.
Trevor Sargent
Question:215 Mr. Sargent asked the Minister for Finance if he will waive excise duty on bio-fuels in the light of the EU Directive obliging states to use up to 2% bio-fuels in the transport sector by 2004; and his views on the benefits of bio-fuel compared to mineral fuels for limiting greenhouse gas emission. [30713/01]
It is not my intention to indicate what, if any, tax measures will be proposed in the budget. Concessional arrangements for biofuels provided in earlier Finance Bills were largely unused, except in very limited trial programmes.
As the cost of producing biofuels and of making them commercially viable are considerable, the current low level of crude oil prices may also discourage future commercial exploitation of such products. The European Commission recently adopted an action plan and two proposals for directives to foster the use of alternative fuels for transport, starting with the regulatory and fiscal promotion of biofuels. The action plan outlines a strategy to achieve a 20% substitution of diesel and gasoline fuels by alternative fuels in the road transport sector by 2020. One proposed directive would establish a minimum level of biofuels as a proportion of fuels sold from 2005, starting with 2% and reaching 5.75% of fuels sold in 2010. The second proposed directive would give member states the option of applying a reduced rate of excise duty to pure or blended biofuels, when used either as heating or motor fuel. Neither directive is agreed and no discussion of the tax directive has taken place.