Clare Daly (Dublin North, Socialist Party)
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Question 135: To ask the Minister for Finance if it is the case that the total VAT currently being charged on ESB bills is being charged on the total bill including the carbon tax and if this is so the basis for same. [8184/12]

Michael Noonan (Limerick City, Fine Gael)
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I would point out initially that the carbon tax does not apply to electricity and as such ESB bills do not include a carbon tax element, to which VAT would apply. The amount on which VAT is chargeable, in accordance with section 37(1) of the Value-Added Tax Consolidation Act 2010, is the total consideration receivable by the supplier, "including all taxes, commissions, costs and charges whatsoever" but not including the VAT itself.

VAT is governed by the EU VAT Directive, with which Irish VAT law must comply. Article 78 of the VAT Directive provides that the taxable amount shall include "taxes, duties, levies and charges, excluding the VAT itself".

In this respect, where a supply of service, such as a gas bill, includes carbon tax, VAT law dictates that VAT should be calculated on the carbon tax element of the charge as well as the charge for the service. The same situation applies in the case of other excises, including for example excises on petrol, auto-diesel, tobacco and alcohol products.

Guidance in relation to the VAT treatment of the total consideration receivable by a supplier is set out in the VAT Guide. This publication is available on the Revenue website at www.revenue.ie .