Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I thank all Deputies for their contributions and overall support for this measure. I will seek to address a number of the questions that have been raised. One question related to the reason the installation of solar panels is now permitted to attract a zero rate. That is a specific change that was made as a result of the 2022 VAT directive. One of the options that directive provides for is that a zero rate would apply within category 10c. That directive is for the supply and installation of solar panels on and adjacent to public and other buildings used for activities in the public interest, housing and private dwellings. That addresses another question that was raised about farm buildings. Farm buildings are not permitted under the VAT directive to have the zero rate applied to them. It is, in effect, for public buildings, housing and private dwellings. The change we are making here relates explicitly to residences and private dwellings. That is the change we are making.

I note the points made by Deputy Michael Healy-Rae about the announcement of the measure. I took the proposal to Cabinet on 5 April and formally announced the measure at that point. I also announced the details of the date on which this change would come into effect. I was aware, of course, of the questions that had been raised in the days leading up to the announcement and we sought to address those as best we could when the Cabinet made its formal decision. I made my first public comment on the issue when we had a Government decision in that regard.

It should be recognised that we are making a lot of progress in respect of the supply and installation of solar panels. Approximately 50,000 homes in Ireland now have solar panels. Approximately 17,000 solar installations were connected with the grid last year. By any measure, that is significant progress. Deputies Nash and Matthews have acknowledged the removal of the requirement for planning permission for the installation of panels in private homes. That has been a positive development. We are seeing the growing success of the microgeneration support scheme and the increasing number of applications through the domestic solar photovoltaic, PV, scheme operated by the SEAI. There is an enormous amount of potential for further development.

I too have received correspondence from providers and people who have recently paid for and had solar panels installed. They have asked whether this change can be applied retrospectively. The answer is that it cannot. As we know, VAT operates on two-monthly cycles and that is why I am using the financial resolution, subject to the approval of the Dáil this evening, to allow this important measure to come into effect on 1 May, which is the start of the next VAT period. It is not possible to apply this change to the previous VAT period, which began on 1 March.

I have answered the question about farm buildings. They are outside the scope of the EU VAT directive and, therefore, a zero rate cannot be applied to such buildings.

There was also a question about price and the impact this measure will have. It removes the VAT but does not, of course, control the pre-VAT price. That is where we need competition to have an impact. Of course, we want consumers to benefit from the elimination of VAT.

This is an investment by the State. It is an investment by taxpayers by way of tax foregone. This is a tax expenditure that the Government is proposing and hopefully the House will approve this evening. We will have a further opportunity in a moment when the Finance Bill is going through to tease out some of the other questions. The reduction in the VAT does not only apply to an SEAI-registered installer; this is the application of a change in taxation law. Therefore, it applies across the board in that respect. There are some other questions that we will get a chance to come back to as we debate the Finance Bill over the next hour and a half.

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