Seán Fleming (Laois-Offaly, Fianna Fail) | Oireachtas source

I thank the Deputy for raising this, and I join other Members in giving condolences to the Minister, Deputy Donohoe, on the sad passing of his mother.

In regard to the question at hand, the Minister for Finance and the Government are very conscious of the negative impact the rapid rise in energy costs is having on society. The Government is doing everything within its powers to address the issue. However, it is not possible to insulate people completely from these increases as factors causing them, such as the war in Ukraine, are outside our control. We believe, however, that the tax reductions introduced strike a balance between passing a significant benefit to consumers while managing the tax base and respecting the constraints of the energy tax and VAT directives at EU level.

In regard to the Minister's engagement with Commissioner Gentiloni, the Deputy should note that, in his correspondence, the Minister outlined the various actions he had taken to mitigate the cost of energy for households and businesses in budget 2022 as well as the additional €505 million package in February. He also outlined the further March package of measures providing for a reduction in excise duty on petrol of 20 cent, on diesel of 15 cent, and on marked gas oil of 2 cent.

The Minister acknowledged the importance of the energy tax and VAT directives, in particular the framework they provide for a consistent application of these taxes across all member states. However, in the context of the significant increases in energy prices, he outlined the limitations of the recent changes to Annex III of the VAT directive, given the reduced rates may only be applied to gas and electricity. Therefore, other fuels remain outside the scope of the reduced rates. In this context the Minister asked the Commission to consider allowing member states to respond to the crisis with greater flexibility than is permitted under the directives. On 23 April, Commissioner Gentiloni wrote to all ministers of finance in regard to energy and energy prices, responding to the points the Minister, Deputy Donohoe, and his European counterparts had raised. The Commissioner highlighted the current flexibility provided by EU directives, including the newly agreed amendment to VAT rates. The Commissioner indicated the Commission does not envisage any further revisions of the EU taxation framework to respond to the current crisis. The Minister, Deputy Donohoe, and his officials will continue to engage with the Commission and with other European counterparts to seek the maximum degree of flexibility for member states to respond to the current energy crisis.

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