Terence Flanagan
Question:254. Deputy Terence Flanagan asked the Minister for Finance his views on a matter regarding VAT (details supplied); and if he will make a statement on the matter. [19089/13]
View answerTuesday, 23 April 2013
Questions (254)
Written answers
The VAT rating of goods and services is subject to the requirements of EU VAT law with which Irish VAT law must comply. The reduced VAT rate of 13.5% applies to the supply of gas and electricity in Ireland. The majority of EU Member States apply a much higher VAT rate to the supply of gas and electricity as EU VAT law provides that the standard VAT rate should apply to these services. However, as part of a derogation to EU VAT law, Ireland is entitled to retain a reduced rate to the supply of gas and electricity on the basis that we applied a reduced rate to the supply of domestic fuels on 1 January 1991. However, under this derogation the VAT rate may not be reduced below 12%.
While it is possible, therefore, to reduce the VAT rate on gas and electricity to 12%, this would have to apply to all activity currently applying at the 13% rate, as EU VAT law does not allow the application of three reduced VAT rates. Such a move would cost around €270m. I have no plans to reduce the 13.5% rate as this would be costly to the Exchequer.
While it is not possible under EU VAT law to make reductions based on the age profile of the customer, I would point out that the Department of Social Protection provide a household benefits package, which comprises an electricity or gas allowance, telephone allowance and television licence to elderly people living permanently in the State. In terms of domestic fuels, such persons can decide to receive an electricity allowance credit of €35 each month or a gas allowance credit of €35 each month. People aged over 70 years of age can qualify regardless of their income or household composition. The package is also available to carers. Customers under the age of 70 who are in receipt of a qualifying payment and live alone or only with certain categories of people may also have an entitlement to the package. For those customers aged between 66 and 69 years and who are not in receipt of a qualifying payment, a means test must be satisfied to determine eligibility for the package.