Dáil Éireann Debate, Wednesday - 29 September 2004
317 Mr. R. Bruton asked the Minister for Finance if VAT is applied to that part of the ESB charge which is used to generate resources to facilitate the generation of energy from reusable sources; the reason he views that this element which is itself paying tax for a designated purpose should also be used to generate additional VAT revenue; and if he will make a statement on the matter. [22547/04]
View answerI assume the Deputy is referring to the public service obligation, PSO, levy shown on bills issued by the Electricity Supply Board to its customers. The PSO levy is based on the approved costs incurred by the ESB in complying with public service obligations imposed on it. These obligations require the ESB to purchase the output of certain peat and renewable-alternative electricity generating stations in the interests of security of supply and environmental protection respectively.
The PSO levy constitutes part of the consideration which is payable to the ESB by its customers and is directly linked to the price of the electricity being supplied. EU VAT law, with which Irish law must comply, requires that VAT be applied to the total consideration due in respect of supplies of goods or services, including all taxes, duties, levies and charges but not including value added tax chargeable in respect of the supply itself. On this basis, the ESB is obliged to charge VAT on the PSO levy. The rate at which VAT is charged is 13.5% which is the same rate as that applying to the supply of electricity.
318 Mr. Gregory asked the Minister for Finance if he will remove stamp duty from houses purchased as a primary residence in order that families in need of a home are not treated in the same way as investors; and if he will make a statement on the matter. [22853/04]
View answerAs the Deputy will appreciate, stamp duty is a significant contributor to the Exchequer which helps to fund Government spending on public services such as health and education. Stamp duty receipts also allow for a broader tax base than would otherwise be possible.
All owner-occupiers are generally exempt from stamp duty on new houses where the property is 125 square metres or less, whereas an investor who purchases a new house for renting is liable for stamp duty where the price exceeds €127,000. First time buyers are also exempt from stamp duty on second hand houses up to the value of €190,500 and benefit, thereafter, from reduced rates on second hand properties up to €381,000 when compared to other purchasers, including investors. In addition, mortgage interest relief is available at source in respect of interest paid on moneys borrowed for the purchase, maintenance, repair or improvement of that taxpayer's main residence, including second-hand houses.
Applying the exemptions currently in force for new properties to first-time purchasers of second-hand houses would result in a loss of approximately €60 million per annum to the Exchequer. If these exemptions were granted to all owner occupiers, the cost would be considerably higher.
The Deputy will be aware that I receive numerous requests to introduce new tax reliefs and expand the existing ones associated with the purchase of residential property. However, tax reliefs reduce the tax base and would inevitably lead to calls for other concessions to be introduced into the stamp duty code. In addition, there is no guarantee that the tax revenue forgone would accrue to the purchaser as there would most likely be a consequent increase in house prices.
As the Deputy will appreciate, given the forthcoming budget, it is not appropriate for me to comment at this stage on the possibility of changes to the stamp duty code.
