Micheál Martin (Cork South Central, Fianna Fail) | Oireachtas source

I thank the Deputy for raising the serious issue of rising gas prices and energy prices more generally. This is a problem across Europe and the globe. In anticipation of that, we increased the fuel allowance and brought in a set of social protection measures in the budget that are designed to help people deal with this issue. I said "help" because it does not cover it in its entirety. We have also introduced a taxation package. The social protection package comes to approximately €550 million and the taxation package comes to in and around €520 million. This gives extra disposable income to people to deal with this issue. We are also looking at other measures and ascertaining whether we can do more to reduce household bills, particularly household energy and electricity bills. We recognise that this is very challenging for many families. The budget was designed around helping people with the cost of living. The European Central Bank is clear that it is still holding to the view that this is a temporary spike in energy prices and that prices will reduce in the first half of 2022.

With regard to VAT, as I have illustrated before, we are not in a position to reduce VAT to 0% or anything like that, as has been suggested. It just cannot be done because of the decisions we have already taken to opt for a lower rate of VAT on energy more generally. Under European Union rules, our reduced rate of VAT, 13.5%, on energy cannot be reduced below 12%. If we were to attempt to reduce the rate to, for example, 9% for a few months, the rate would revert to the standard rate of 23% afterwards because we got a derogation a long time ago in respect of the lower rate. I know other parties have suggested that we go back to 0% but I have been informed we simply cannot under the EU frameworks we operate under with regard to VAT. However, we are looking at other ways to see if we can reduce the impact of these current increases in energy prices on household bills.

See this speech in context