Dáil Éireann Debate, Thursday - 10 November 2022
101. Deputy Neasa Hourigan asked the Minister for Finance if he will provide an update on the work of his Department to bring VAT rules into line with common EU priorities such as fighting climate change; and if he will make a statement on the matter. [55913/22]
View answerI ask the Minister to provide an update on the work his Department is doing to bring VAT rules into line with common EU priorities, such as fighting climate change.
The VAT rating of goods and services is subject to the requirements of EU VAT law, with which our law must comply. As the Deputy is aware, significant changes have now occurred with regard to that. The tax strategy group, TSG, published a paper earlier this year outlining some of the options now available for Ireland and other member states to consider. I suspect the one the Deputy is most aware of is that concerning solar panels and the potential for a lower rate or zero rate of VAT for them. I did not believe it was appropriate to introduce the measure in this budget, but we will continue to look at this as part of the future TSG process. I will share with the Deputy the rationale for our decision that this change could not be made in the budget. There is flexibility in this regard and I have used it elsewhere, for example, in applying the zero rate of VAT to defibrillators, which was needed.
I thank the Minister for his reply. Taxation, VAT in particular, is one of the levers we can use to drive environmentally friendly business. That is not only for things such as solar panels. It can be a tool for businesses that will facilitate, reduce and reuse, even before we get to recycle, in terms of preventing waste and emissions.
In February of last year, the Minister spoke to the Committee on Budgetary Oversight and said he was engaging with the OECD and European Commission to ensure a best practice approach. Can the Minister give any information about progress that has been made in that regard and in supporting green business that, as I say, will help to reduce and reuse waste instead of creating it?
I thank the Deputy. We have been engaging with the European Commission, particularly in respect of the VAT directive that was introduced earlier in the year. The engagement we have had with the OECD has concentrated on other areas of taxation rather than the area to which the Deputy has referred. As I said, this is a new area of flexibility that has been granted to us. We are going to ensure in the work we do in preparing for next year's budget, which may seem far away but will be upon us quickly, that we think through these matters and evaluate them clearly. We have made other tax changes that have been recognised as playing a valuable role in supporting our efforts to achieve a lower carbon future.
