Tax Yield.

Dáil Éireann Debate, Thursday - 18 May 2006

Thursday, 18 May 2006

Questions (129)

Paul Kehoe

Question:

129 Mr. Kehoe asked the Minister for Finance if he will publish the amount of VAT taken by the Government on fuel since 1997; his plans to put a cap on the VAT taken in on fuel in view of the escalating fuel prices and the upward rise of inflation; the rate of VAT charged on fuel for the past ten years; the breakdown of the figures; and if he will make a statement on the matter. [18972/06]

Written answers

Minister for Finance (Mr. Cowen)

I am informed by the Revenue Commissioners that it is not possible to furnish precise figures of the VAT take on fuel, as the information furnished on VAT returns does not require this to be identified. However, estimates of the VAT yield on fuel, based on consumption levels of oil products as well as statistical data derived from non-Revenue sources, are as follows:

VAT Yield from Fuel

Fuel	1997	1998	1999	2000	2001	2002	2003	2004	2005
	€m	€m	€m	€m	€m	€m	€m	€m	€m
Electricity	69	77	80	85	89	98	117	129	156
Coal	24	23	14	9	21	18	18	39	50
Turf	9	9	7	9	14	13	12	11	14
Gas	17	21	24	26	27	34	42	34	41
C/Heating Oil	15	15	17	32	23	28	31	48	65
Kerosene	19	20	22	24	34	42	48	51	69
LPG Domestic	6	6	6	6	8	8	9	10	12
Petrol	196	207	224	289	265	286	290	328	368
Auto Diesel	16	19	22	30	27	30	32	38	46
Total	371	398	416	511	508	558	600	687	822

It should be noted that there are numerous factors that would have an impact on the price and VAT yield from fuel. Fuel prices are driven by a number of factors including the price of oil on international markets, exchange rates, production costs and refining costs. The rise in oil prices over recent periods reflected additional factors such as geopolitical uncertainty, supply disruptions and strong economic growth in countries such as China. Furthermore, the increase in the VAT yield from fuel is more by-product of the unprecedented level of economic activity that has taken place over the lifetime of this Government.

In relation to the rates of VAT applicable to fuel, the position is that the VAT rating of goods and services is subject to the requirements of EU VAT law with which Irish VAT law must comply. In this regard, it would not be possible to place a cap on the amount of VAT raised from fuel.

Petrol and auto diesel are subject to the standard VAT rate which in Ireland was 21% up to 31 December 2000. The standard VAT rate was reduced to 20% on 1 January 2001 and increased to 21% on 1 March 2002. It would not be possible to reduce the VAT rate applicable to motor fuel without reducing the rate for all goods and services subject to the standard VAT rate. A decrease of 1 per cent in the standard VAT rate would cost the Exchequer €390 million per annum.

Ireland applies the reduced VAT rate to all of other items listed in the table, as they are used to create heat or light. Under Article 28 (2)(e) of the Sixth VAT Directive the supply of electricity and gas is subject to the reduced VAT rate. This Article allows Member States, which at 1 January 1991 applied a reduced rate to supplies of goods and services other than those specified in Annex H of the Sixth VAT Directive, to apply a reduced rate provided for in Article 12(3) to such supplies. The reduced VAT rate in Ireland which was 12.5% up to 31 December 2002 was increased to 13.5% with effect from 1 January 2003. Under EU law Member States can continue to apply reduced rates in such cases provided the rate is not below 12%. Such a reduction in the reduced VAT rate, while having a significant Exchequer cost, would be likely to have little or no impact on the retail price of such products.