Donohoe rejects Sinn Féin’s call to cut tax on heating oil
Spain and the Czech Republic want to reduce the VAT rate on national energy supplies because their tax rate “is so much higher than ours”, according to Finance Minister Paschal Donohoe.
He rejected Sinn Féin’s call to engage with the European Commission to reduce the tax rate on heating oil which had increased by “46%” while electricity increased by 21% and gas by 14%. %.
Party finance spokesman Pearse Doherty said “we must make every effort to protect households from fuel poverty this winter” and the 2022 budget failed to do so.
But Mr Donohoe said the majority of other EU countries “are dealing with this very serious problem for many families in exactly the same way we are.” He said this was done thanks to changes to social benefits announced on Budget Day, including an increase in the People Living Alone scheme, fuel allowance and the income threshold for the Working Families Payment Scheme. .
He insisted that “we are absolutely aware of the additional pressure many are facing at the moment and we recognize it by decisions which have already been made in the budget”.
During Dáil’s financial questions, Doherty said the Czech Republic had passed legislation to introduce a zero rate on energy bills for the winter months and it looked like the European Commission was going to allow that to happen. .
He called on Mr Donohoe to consider discounts during the winter months and to engage with the Commission like the Czech Republic is doing to try to take the strain off households.
The Czechs had “reduced the cost of energy bills by 11%” and the Spanish government had also reduced bills until the end of the year, Doherty said. He added that Britain’s Labor Party had called on the Tories to zero-rate their energy bills during the winter period.
And he said that the EU itself presented a statement “which allowed member states to refund VAT collected on energy”.
But Mr. Donohoe insisted “that there is no provision in the [EU] directive that would allow a VAT exemption or VAT refund for domestic energy supply ”and the government, recognizing the impact of increases in energy prices, had introduced a“ targeted package of social protection interventions ” .
He added that Spain and the Czech Republic have a standard VAT rate of 21 percent while Ireland’s is 13.5 percent. “And that is why they have every interest in seeking to change their VAT payment, because their VAT rate is so much higher than ours.”