Dáil Éireann Debate, Wednesday - 30 April 2014
109. Deputy Thomas P. Broughan asked the Minister for Finance if he will consider reducing the rates of excise duty or VAT charged on home heating oil due to the continued increases in the price of this product which are causing financial hardship for many families. [19524/14]
View answerI am advised by the Revenue Commissioners that 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 home heating oil, and gas and electricity in Ireland. The majority of EU Member States apply a much higher VAT rate to the supply of home heating oil 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 home heating oil 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 home heating oil to 12%, under EU VAT law this would have to apply to all activity currently applying at the 13.5% rate and as a result would be very costly to the Exchequer.
With regard to excise rates on home heating oil the rates currently applicable for diesel and kerosene used for home heating are €102.28 per 1,000 litres and €50.73 per 1,000 litres, respectively.
Ireland, as with other countries, has experienced an increase in fuel prices. This increase is an international phenomenon. 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 in Northern Africa and the Middle East with potential supply disruptions. The Exchequer yield from excise, as excise is set at a nominal amount, does not increase as the price of fuels increase. I have no plans, therefore, to reduce the rates of VAT or excise duty on home heating oil.
