I propose to take Questions Nos. 189 and 190 together.
Carbon tax is a charge on fossil fuels based on the amount of carbon dioxide emitted from the fuel on combustion. When first introduced in Budget 2010 the tax applied to certain oil and gas fuels used for motor or heating purposes and was charged at a rate of €15 per tonne of carbon dioxide emitted from the fuel concerned. In 2013 a carbon tax on solid fuels was introduced at an initial rate of €10 per tonne. In 2014, the rate for all carbon charges was increased to €20 per tonne of carbon dioxide emitted.
The application of Carbon tax on solid fuel was delayed until 2013 to allow for the introduction of a regulatory framework covering the marketing, sale, distribution and burning of solid fuels in the State and setting out particular environmental standards for coal supplied in the State. This framework was required to counter potential large scale sourcing of coal from Northern Ireland, where lower sulphur standards apply.
Since its introduction in 2010 to the end of 2017, Carbon tax receipts amounted to almost €2.9bn. These figures include receipts from Solid Fuel Carbon tax of €91.6m from 2013 to 2017. Further information on Carbon tax receipts is published on the Revenue statistics website at:
The current VAT rate on solid fuel in the State is 13.5%. The rate of VAT on solid fuel in Northern Ireland is currently 5%. There is not, at present, a comparable carbon tax regime in place in Northern Ireland. Based on the current rate of Carbon Tax in this State of €20 per tonne of CO2 emitted, the specific rates for Solid Fuel Carbon Tax are as follows:
Coal: €52.67 per tonne
Peat: €36.67 per tonne (peat briquettes)
€17.99 per tonne (milled peat)
€27.25 per tonne (other peat)
Certain solid fuels, primarily coal, are regulated under the Air Pollution Act (Marketing, Sale, Distribution and Burning of Specified Fuels Regulations) 2012 (SI No. 326 of 2012), as amended. These Regulations are enforced and applied by local authorities under the aegis of the Department of Communications, Climate Action and Environment.
The following aspects of the Solid Fuel Carbon Tax should be noted:
- Solid Fuel Carbon Tax is payable by a taxable person who makes a first supply of solid fuel in the State;
- every supplier who intends to make a first supply of solid fuel in the State must register with Revenue for the purposes of the tax;
- liability to Solid Fuel Carbon Tax does not arise on the physical presence of the goods in the territory of the State, but on supply in the State by the taxable person who is obliged to make a return and pay the tax one month after the two-month accounting period;
- a supplier based outside of the State who brings solid fuel into the State for sale direct to the public, must register for SFCT with Revenue;
- the tax is not payable by private individuals travelling to the North to collect solid fuel for their personal consumption, provided the private individual accompanies the fuel back into the State;
- persons extracting peat in this State for their own use and not for supply are not liable to SFCT tax and are not required to register with Revenue.
The Solid Fuel Carbon Tax is applied using Revenue’s standard model of self assessment with liable taxpayers subject to the possibility of Revenue audit of Solid Fuel Carbon tax returns. It is important to note that European Union Single Market constraints preclude the use of any cross-border movement controls in the administration of this tax. Under EU law, the tax cannot give rise to trade restrictions or intra-EU formalities. While Revenue has no authority to stop vehicles and physically inspect loads of solid fuel, such authority would not be relevant from the point of view of enforcing Solid Fuel Carbon Tax, given that liability does not arise on the physical presence of the goods in the territory of the State. Liability arises on the first supply of the solid fuel in the State by the taxable person who is obliged to make a return and pay the tax one month after expiry of the two – month accounting period. This means that collection of the tax is heavily reliant on the regulatory regime for sales of certain solid fuels operated by the Department of Communications, Climate Action and Environment and enforced by local authorities. I understand that there is ongoing contact between Revenue and the Department of Communications, Climate Action and Environment in relation to this area.
Data is not available on the amount of solid fuel sold between Northern Ireland and this State.
The serious threat that fiscal fraud poses to legitimate business, to consumers and the Exchequer is recognised and I am advised by Revenue that tackling this criminal activity has been one of its priorities over recent years. There is extensive formal and informal cooperation in place between Revenue and the UK tax authority, Her Majesty’s Revenue and Customs (HMRC), which is the responsible tax authority in Northern Ireland. Where appropriate, this also includes An Garda Síochána and the Police Service of Northern Ireland. The aim of this cooperation is to target the organised crime groups responsible for a large proportion of criminal activity, including activities aimed at combatting fiscal fraud as it relates to a range of excisable products such as mineral oils, tobacco products and alcohol. The setting up in 2016, within the framework of “A Fresh Start: the Stormont Agreement and Implementation Plan”, of a Joint Agency Task Force, which includes Revenue as well as An Garda Síochána and their Northern Ireland counterparts was a further step in supporting and facilitating such cross border cooperation.
Mutual Assistance procedures are also in place in both Revenue and HMRC which can support specific compliance interventions (including audits) relating to the tax affairs of any specific person.
I am advised that there has not, to date, been specific consultation between Revenue and HMRC in relation to the carbon tax and VAT aspects of the solid fuel sector. In this regard it should be noted that there is not, at present, a comparable carbon tax regime in place in Northern Ireland for the sale of solid fuels.
Revenue also works in close cooperation with the relevant authorities in other jurisdictions, the European Anti-Fraud Office, and other international bodies and agencies in the ongoing programmes of action at international level to combat both the illicit fuel and tobacco trades.