Dáil debates
Wednesday, 22 February 2023
Financial Resolution No.3: Value-Added Tax
8:17 pm
Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source
I move amendment No. 1:
In Schedule 2, inserted by paragraph (l), by the substitution of the following for the row dated 1 May 2023:
"
| 1 May 2023 | €483.34 | €483.34 | €425.45 | €425.45 | €425.45 | €0.00 | €164.23 | €11 1.14 | €142.76 | €79.17 | €9.36 |
Léiríonn an tábla atá os ár gcomhair inniu go mbeidh an Rialtas ag ardú na cánach ar ola faoi choinne an tí a théamh agus go mbeidh sí ag dul suas ar an 1 Bealtaine arís agus a mhacasamhail don mhí ina dhiaidh sin. Is droch-chinneadh é sin. Is cinneadh lochtach é agus. Is cinneadh é atá lonnaithe sa tuiscint atá ag an Rialtas nach bhfuil mórán sa tír seo nach bhfuil mórán sa tír seo taobh amuigh de cheantar Bhaile Átha Cliath agus na bardais thart air sin. Má fheicimid ar mo cheantar féin san iarthuaisceart agus ar an iarthar agus ar cheantair iargúlta na tíre seo, feicimid go bhfuil dhá thriain de thithe mo chontae féin, Contae Dhún na nGall, ag úsáid ola faoi choinne a gcuid tithe a théamh. Níl tacaíocht ar bith ansin ón Rialtas.
Feicimid go bhfuil tacaíocht ann má táthar ag úsáid gáis faoi choinne an tí a théamh nó má táthar ag úsáid leictreachais faoi choinne an tí a théamh. Tá ísliú ansin ó cháin agus bhí ísliú ansin le bliain anuas. Tá sé sin le síneadh anois ar feadh tamall eile. Tá fáilte roimhe sin ach má úsáidtear ola, is é an rud atá an Rialtas ag rá nach go bhfuilimid ag dul ag cur billí breise ar an duine agus ar a theaghlach. Tá dhá thriain de thithe i mo cheantar féin i nDún na nGall fágtha le cinneadh an Rialtais go bhfuil siad ag dul ag déanamh rudaí níos measa dóibh i mbliana, cé go bhfuil an costas maireachtála ag cur isteach go mór orthu.
Má fheicimid ar na ceantair atá ag úsáid ola agus tá an tríú cuid den Stát, go hiomlán, ag úsáid ola faoi choinne an phríomhróil ina chuid tithe a théamh, agus ar an áit a bhfuil siad lonnaithe, tá an mhórchuid dóibh lonnaithe san iarthar, san iarthuaisceart agus sa deisceart, i gceantair iargúlta. Feicimid, ar an mórchuid, gur tithe atá ann nach bhfuil ar an gcaighdeán céanna agus a bhfuil fadhbanna iontu ó thaobh insulation agus a leithéid. Tá siad ag cailliúint teasa níos mó ná tithe nua-aimseartha agus nua-aoise. Mar gheall air sin, tá costais bhreise á gcur ar na teaghlaigh seo.
Má éistimid leis an Central Statistics Office, CSO, deir sí go hiontach soiléir ó thaobh an ráta boilscithe, gurb iad na teaghlaigh a bhfuil an ráta is airde orthu ná iad sin ina bhfuil an t-ioncam is lú acu agus feicimid go bhfuil Dún na nGall ar cheann de na contaetha ina bhfuil an t-ioncam is lú ann. Is é an dara rud ná tithe agus teaghlaigh atá i gceantair iargúlta. Ní hamháin go bhfuil daoine ag feiceáil go bhfuil a gcuid costas ag dul in airde, ach go bhfuil siad ag dul suas fosta mar gheall ar an áit a bhfuil siad lonnaithe agus an teacht isteach atá na tithe sin, tá ráta boilscithe níos airde acu ná mar a mbeadh sé dá mbeidís ina gcónaí anseo sa phríomhchathair.
There are a number of financial resolutions before us and I will go through them one by one. I have tabled a number of amendments. There are five amendments in total, all dealing with the table with regard to excise duty, as the Minister acknowledges. I welcome the fact that the Minister acknowledges there is excise duty on home heating oil. The table also deals with the issue of excise duty on petrol and diesel and marked oil, which affects the agricultural sector. The other resolutions before us also deal with issues in the VAT rate, which I will come to, and a number of other matters. I will also deal with the Labour Party's amendment, but my colleague will speak on that.
The financial resolution not only provides for a staggered increase in the rate of excise applied to petrol and diesel to be applied over the year, but the rate of excise applied across a number of fuel types. With regard to the issue of petrol and diesel, we know that the cause of travel has increased for every household. There are people here in this Chamber who hope we would all get on a bus or a train, or would all be able to walk or cycle to our place of work, or the local doctor's appointment, school or hospital, but when one lives in the community such as the one I live in, that is not possible for many people. We all saw the imagery of the Minister holding up the map of Ireland and how my own county was left behind in that. The last train that rolled in County Donegal was in 1963 and we still have no plans for Government to increase it. There are considerable challenges in public transport in my own county, but they are not unique to it. They happen throughout the State.
Many households, if they wish to be able to make that appointment, get their children to the school or go to the local shop, need to get in the car and drive there and back. The reality is that the cost of travel has increased for every household in the State. The price of petrol and diesel at the pump now stands at €1.65 and €1.68 per litre, respectively, in February.
If the rates were to increase as originally planned, we would see the cost of petrol go up to €1.85 and diesel at €1.83. The resolution provides for staggered increases in the excise rate to be applied that will increase the price of petrol by 6 cent per litre in June, by 7 cent in September and by 10 cent in October and the price of diesel by 5 cent in June, 5 cent in September and 8.5 cent in October. People will notice that this will not just bring us back to where we were but that this excise is more than what applied last year. Of course, the reason for this is that, on 11 October, the Government is going to increase the cost of petrol and diesel further by putting additional carbon tax on those fuels. I genuinely believe that this is a short-sighted approach.
The Minister said that the Government will keep everything under review. One of the amendments we have put before him provides for the excise duty applying to petrol and diesel to be reviewed before 1 June, when the Minister proposes to increase these rates. The reason we propose this is that no one has a crystal ball and knows what will happen. Is the Government genuinely saying that, if the cost of petrol was €1.90 per litre, it would proceed with an increase in the excise duty on 1 June no matter what? Is the Minister suggesting that is a possibility? That is the wrong approach.
While there are other factors at play, the war in Ukraine is the primary driver of inflation, including inflation in the cost of fuel at the pumps. There is no guarantee that these prices will continue to drop. We would like to see them drop further than they have but there are a number of factors creating uncertainty or presenting risks. The reopening of China is happening at a more accelerated pace, which will have consequences for oil reserves. America is to make decisions on the supply of oil into the markets it supported last year. Will this continue in the same way right through the summer months? We have issues with regard to the sanctions being imposed on Russia. These are really biting now, which will have an impact with regard to oil products. Crucially, the recent EU ban on Russian oil products is to take effect this month. We do not know what the outworking of that ban will be.
The outworking of all of these factors may be that prices remain stable, that prices reduce or that prices increase. The Government decision to increase the price of petrol and diesel on 1 June regardless of what may come is therefore the wrong decision. I believe this is an ideological battle being fought in Government and that the case of the motorist and the individual I spoke to has not been at the centre of this decision. The most appropriate thing to do would be to extend the current rates of excise on petrol and diesel until that point in June and review the matter at that time. Let us look at what prices are at the pumps at that time and make an informed decision. The Minister of Finance has made it clear that he will make no further intervention until at least the budget. That poses a big risk for families and those who need to use their cars. I strongly argue that a review needs to take place before 1 June. We need a common-sense approach based on the state of petrol and diesel prices. I would not be able to support an increase in excise duty on petrol and diesel if we were in the situation we were in at this time last year, the situation that created the reason for a cut in excise in the first place. That review is required. I again strongly argue that the further increase the Government plans to put on petrol and diesel by means of a carbon tax on 11 October is not warranted and should not proceed. I am sure we will have that argument again in the run-up to the budget and beyond.
As I said in my opening contributions, one of the gaping holes in the Government's approach to the issue of excise duty is the question of home heating oil. There are people out there who feel genuinely abandoned by this Government in that regard. A third of households in the State use home heating oil as the primary way to heat their homes. In my community in the north west, in Donegal and in the west, two thirds of households use home heating oil as the primary way to heat their homes. The Government has offered no support to those families through a reduction in excise duty. The reason it has not supported a reduction in excise duty for those families is that this duty is called carbon tax. That is the only reason. It is because of the name by which the excise duty in commonly known. That is the only reason and it makes no sense. The Government has decided to provide support to families with regard to electricity and gas. We will talk about the level of support provided in that area but if you are one of those individuals who relies on home heating oil to heat your home, like two thirds of those in my own county of Donegal, the Government has decided not only not to help you by means of a reduction in excise duty on that fuel, a fuel whose price has gone through the roof since last year, but also to make things worse for you. It has decided to increase the cost.
The table of excise duty rates that is before us lays out very clearly that, come 1 May, the excise duty on home heating oil is going to increase further. That is an appalling situation. I mentioned that the rate of inflation is different for different people. It is not only different for different individuals based on their household income, but it is also different based on the geographic location in which people live. Those who use home heating oil are primarily in the west, north west and south west of the State. They are not completely concentrated in those areas but that is where they are primarily concentrated. These are some of the areas in which disposable incomes and household incomes are lowest, in which levels of poverty are highest and, in some cases, where the worst insulated homes are. The Government is therefore exacerbating the situation by continuing to refuse to reduce excise duty on home heating oil and by proactively deciding to increase costs on those families.
We have an amendment before the House tonight that would allow for excise duty on home heating oil to be reduced to zero. It can be done. It could be done tonight if the Government so wished. It should have happened before now. There is an opportunity for it to happen tonight. As to where the level of excise duty will be, it is currently €104 per 1,000 l and, in May, it will rise to €123 per 1,000 l. What does this mean? The rise in May means that the Government is going to increase the cost of filling your tank with home heating oil by €19. The proposal before us is to reduce the excise duty on home heating oil until October, which would reduce the cost of filling that same tank by €125. I strongly argue that those families and households who have been left behind over the last year should be supported in this way through the adoption of the amendment we have brought forward. My colleague will talk about agricultural diesel and the importance of reducing the rate on that fuel as also provided for in our amendment.
I will briefly mention the other resolutions the Government has brought before us, particular that relating to VAT on electricity and gas. The financial resolution provides for the extension of a reduced 9% rate of VAT applying to electricity and gas until the end of October. We know that the price of electricity has shot up over the last two years. It has doubled while the price of gas has increased by 138%. This extension is therefore necessary. We called on the Government to reduce the rate of VAT applying to electricity and gas as far back as November 2021. We also called for this reduced rate to be extended and kept under constant review. However, it is important to put this measure in context because there is no further support for families in respect of electricity bills. Let us put it in context. The extension of the reduced rate of VAT on gas from March to October will save the average household approximately €22. At the same time, the Government is going to increase the average bill by €17 in May through the imposition of another hike in carbon tax. That is what is happening here. The Government is giving with one hand and taking with the other. On electricity, the net benefit of the measure is also small. As we know, the Government refuses to provide another energy credit on the grounds that energy usage will reduce following the winter months but that is not true.
Figures from the CSO show that the electricity consumption by households over the next three months is the same as the last three months of the year and, therefore, the electricity consumption over April, May and June is the same as the last three months of the year, October, November and December. The CSO will point out that in 2021 the electricity consumption for households was higher in the next three months than in the last three months of the year. Government has spun a narrative that the reason it is not doing anything more on electricity is people will use less the coming months, but the statistics prove that is not the case. In the best-case scenario, they are using the same and the months running into December and, as I said, in 2021 they used more.
From next week on, there will be no subsidy for the energy that will be consumed in homes. I accept another €200 credit will be paid but that will be paid for energy that was consumed in the previous two months. With the exception of Pinergy, which increased its rates seven times, including this year, and has now reduced somewhat, rates have not dropped. They are not looking to drop anytime soon and the Government has still not brought in a windfall tax on these energy companies. I hear the Taoiseach is briefing his parliamentary colleagues today saying that he will not stand for this.
When the Minister's predecessor, Deputy Donohoe, was where he is and I and others put to him the need for a windfall tax and energy companies, what did he say? He said that would be the wrong move. He made the point that it would push up prices on households and he argued against it. That was the position of Fine Gael at that time and obviously it only happened through continuing agitation by us in opposition and others, but also the European Commission moved to ensure that this would happen. The fact is we still do not have a windfall tax. We still see profiteering in this sector.
Moreover, the Government has decided that in the coming months the energy consumed by households will not be supported. There is no support for those consuming energy in April and May, which is absolutely the wrong approach. People feel abandoned because they know the prices of electricity based on the bills that are coming through their doors and they need some type of certainty. That type of certainty is being provided by countries throughout Europe. Germany has no radical government and is not way out there. Over the Christmas period Germany decided to introduce price certainty for their citizens, similar to the proposal we put forward that we have argued with the Minister and his predecessor. The Netherlands did the same over the winter period and gave price certainty to their citizens. France, Poland and other countries right across Europe are doing the same thing. They are bringing in energy price breaks. They are ensuring that they are affordable so that their citizens are not at the brunt edge of inflation. Crucially windfall taxes also need be part of that and the Government should take similar action.
Today's financial resolution provides for an extension of the reduced 9% VAT rate on the hospitality and tourism sector until the end of August. When we discussed this in January, I acknowledged the risks and challenges the hospitality and tourism sector faces this year, including an economic downturn, rising input prices and energy costs, and a fall in disposable income that threatens reduced demand in both sectors in goods and services they provide. The importance of these sectors to our economy and to employment is significant. It cannot be overstated. It is essential that they continue to thrive and grow.
Earlier we dealt with the TBESS. I did not get an opportunity to contribute to that, but I welcome that the Government has amended the scheme. The Government designed a scheme that completely and utterly failed with €1.2 billion allocated and only €32 million drawn down. Companies the length and breadth of the State were locked out of a scheme at a time they desperately needed support. We have been raising this and, in particular, my colleague, Deputy O'Reilly, has been raising this with Ministers for quite some time. It was particularly egregious that certain companies were locked out. For example, those using home heating oil and LPG were locked out of the scheme. I welcome the Government's announcement to include them.
It now needs to do the same for households. It recognised businesses were locked out of that and it needs to do the same for households through taxation, etc. That scheme needs be fit for purpose to make sure that the money flows to businesses, including those in the hospitality and tourism sector. We argued for additional support for small and micro businesses that are struggling but we do not have that. We have a one-size-fits-all where a large multinational company will get the same support that another business can get. I look forward to seeing the detail and dealing with that when we have the detail of that scheme. Because we have lost so much time, it is important to get that right.
When we discussed the issue of the hospitality VAT rate, the Minister mentioned that an economic assessment on the impact of increasing the rate of VAT was being carried out. While that is deferred until the end of the end of August, the issue is still live. He has informed the Dáil he is not doing this because it would increase inflation. That would not be my primary reason for doing it. My greater concern was the impact on the tourism product we offer and the development of that product which has grown recently but we still need to nurture it and also crucially how will it impact on jobs. Those questions will still arise when this rate increases at the end of August.
I am sure the Minister will do this because the assessment that was carried out will be subject to freedom of information anyway. I call on him to publish the assessment on this VAT rate carried out by the Department of Finance so we can have an informed decision on the VAT rate appropriate for this sector in the long term. It is important that Government is transparent on this and that the economic assessment carried out by the Department is a published.
I apologise for taking so much time.
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