Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

I move amendment no. 26:

In page 122, after line 35, to insert the following:

“Report on the VAT treatment of domestic energy bills

56.The Minister shall, within one month of the passing of this Act, prepare and lay before Dáil Éireann a report on the VAT treatment of domestic energy bills and options regarding the effective removal of VAT on domestic energy bills either through reduction or rebate, in the context of rising energy prices and their impact on low and middle-income households.”.

There is no doubt that winter is here. Low and middle income households face an energy crisis in the coming months. There have been over 35 price hikes around energy supply since the start of the year. In the 12 months to October, energy prices rose by 25%. The price of electricity rose by 16% and gas by 23%. The cost of home heating oil, the main fuel source for heating 37% of homes, rose by a staggering 71%. These prices are expected to rise further. These households need a helping hand and they definitely need it now.

Across Europe, we see Governments are responding. We see that they are helping households through a range of measures but the Government here has done nothing beyond a very modest increase in fuel allowance that is out of reach for the majority of workers and families. In Spain, although electricity bills are cheaper than here - indeed, they are cheaper than Ireland in every country in Europe - VAT was slashed by 11% until the end of the year. Okay, Spain had a higher VAT rate but the bill for the householder was cheaper than here. Nevertheless, the Spanish Government reduced a cheaper bill than those here. In the Czech Republic VAT on gas and electricity has been reduced to zero until the end of this year, despite the fact that when that legislation was introduced, it was not in compliance with the EU VAT directive, and it went into negotiations with the European Commission. In Italy, President Mario Draghi launched a package of €3.4 billion to protect households from the energy crisis in October, November and December. That included slashing VAT on gas by 17%, reducing gas charges at a cost of €480 million, cancelling electricity charges at a cost of €800 million and providing a discount on the price of electricity and gas for low-income households at a cost of €450 million. In the absence of this intervention Mario Draghi warned that "in the absence of government intervention, in the next quarter the price of electricity could increase by around 40%, and that of gas by 30%". He took action to stop that. The Italian Government has allocated €1.9 billion, 0.1% of GDP, to continue these measures into 2022. If a similar package of a similar scale was rolled out here for comparison, it would amount to €800 million in 2021 and €460 million in 2022. However, in contrast with these Governments, this Government has done nothing. We in Sinn Féin are calling on the Government to wake up to where families are at, that they are feeling the pinch and the cold and that the Government here needs to act just as Governments are acting across Europe, especially in the context that we have the highest energy prices. The Minister will say that we have a lower rate of VAT but that does not matter to the householder. We have higher energy costs than other countries in Europe. Householders in other countries in Europe have cheaper bills and those Governments are acting. They are protecting consumers and householders but the Minister is refusing.

My party has repeatedly called on the Government to stretch every sinew to provide real and immediate relief for low and middle income households which struggle with lighting and heating their homes this winter. On 13 October the Commission published its toolbox for action and support to tackle rising energy prices. That includes member states, under the energy tax directive, temporarily exempting or applying a reduced rate on electricity, gas and home heating fuels for vulnerable households. We have said that the Government should work with the Commission to zero-rate VAT on household energy bills for a time limited period during the winter months.

This should be done through either an immediate VAT exemption or a VAT rebate, using the agility and innovation displayed by Revenue during the pandemic. The cost of zero-rating VAT for domestic gas, electricity and home heating oil for a three-month period would be €119 million. It would reduce household bills by 12% and thus give immediate relief to people. This could be funded by higher than expected VAT receipts. We see they are higher than expected by in the region of €1 billion in the first 11 months of this year. Instead, the Minister has ruled out this prospect. He has talked about how it cannot happen and how it would be cumbersome to have a VAT rebate. We recognise zero-rating is complex and that is why the Government would have to do what the Czech Government has done but it is not even willing to do that. There are other ways to do it. The VAT rebate is one such example allowed for in terms of the toolbox. However, the Minister has provided no evidence he has engaged with the Commission or looked at alternatives, so we have some. The Government should expand eligibility for the fuel allowance and include households currently locked out due to the rigid qualifying criteria. The Government should extend the fuel allowance season. The Government, if it rules out providing relief to households through removing VAT for the winter months, could introduce a rebate or discount scheme requiring licensed providers of gas, electricity and home heating oil to apply significant discounts to household bills with the value of those discounts being reimbursed by the State.

To date, the Government has not responded to any of the challenges households are facing right now and in the coming weeks so we are asking the Minister to wake up. We are asking him to respond. We are asking him to look at what his colleagues are doing despite households in those countries having cheaper energy bills than households in this State. I am asking the Minister to commit to considering the proposals I have put forward to him and reporting back to the Dáil as soon as possible. We need a financial package of scale to support low- and middle-income households in the face of rising energy costs and we need it now. There are solutions that are implemented in different parts of Europe. One example is that discount scheme whereby the State reimburses the providers for giving homeowners a reduction. That is happening in other areas. We can do it. The Minister put forward that it was a flawed process and a flawed idea. He took our idea and then butchered it in terms of supporting the domestic tourism sector by allowing people to get a rebate on their bills if they went out for a meal. I tell the Minister it is the possible to do this. He is shaking his head and that is fine but there are people sitting at home who are cold because the price of home heating oil has gone up by 71% and they just cannot afford to heat their home the way they used to. That is the reality. The Minister does not have the luxury of just sitting there and shaking his head. He is the Minister of Finance for everybody. He needs to respond to these people and he is refusing to do so.

There are some positive signs. We have been at this now for weeks with the Government. There are some positive signs. An article in the Business Postsays the Government is looking at this and that it is considering bringing forward a package. There are some leaks coming from parliamentary party meetings and all that. Is there going to be any response or is Government going to do what Government does, take its time, have a couple of chats about this and then it will be summer and everything will be sorted? The Government will the weather sorted the problem out for people. However, people need answers now. They need solutions and they need the Minister for Finance to wake up to what they are going through right now, right here and respond.

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