Josepha Madigan (Dublin Rathdown, Fine Gael) | Oireachtas source

I thank the Deputy for raising this issue. It is important to acknowledge that, currently, solid fuels are generally cheaper in Northern Ireland than in the State. This, unfortunately, is a matter over which the Government has no control. The price differentials arise for several reasons, including the lower VAT rate and the absence of a carbon tax in Northern lreland, which has been mentioned by the Deputy. In addition, the much less stringent environmental standards applying to solid fuels in Northern Ireland allow for the sale in that jurisdiction of lower quality solid fuels, which can be significantly cheaper than solid fuels that meet the required environmental standards in this State. This is particularly relevant with regard to coal as there are no restrictions in Northern Ireland on the sale or use of smoky coal, which is significantly cheaper than smokeless coal.

Revenue has responsibility for administering and enforcing the solid fuel carbon tax, which is an excise duty that applies to solid fuels such as coal, when they are first supplied in the State. I am aware that the Deputy has no issue with the carbon tax collected by Revenue on a self-assessment basis. Compliance with it is enforced using the full range of compliance interventions and enforcement provisions for self-assessed taxes.

VAT applies to supplies of solid fuels in the State in line with EU VAT law, with which Irish VAT law must comply. In accordance with the EU VAT directive, the supply of coal and other solid substances offered for sale solely as fuel are subject to the reduced rate of VAT, currently 13.5%. Liability to solid fuel carbon tax arises when solid fuel is first supplied in the State, which means that neither the movement of solid fuel into the State, nor its physical presence in the State, generate a solid fuel carbon tax liability.

In addition, EU Single Market constraints preclude the use of any EU cross-border controls in the administration of solid fuel carbon tax. As such, coal coming into the State from other member states and Northern Ireland is not subject to cross-Border movement controls typical of harmonised excises on mineral oils, tobacco and alcohol. There is no requirement for such movements of solid fuel to be declared to Revenue, nor is there any requirement for solid fuels to enter tax warehouses or a duty suspension regime. Essentially, solid fuels being brought into the State from Northern Ireland enjoy the same freedom of movement that applies to most other goods. Revenue has no authority to challenge transportation or possession of solid fuel that originated in Northern Ireland, as such transportation or possession are not, in themselves, Revenue offences.

Suppliers making first supplies of liable solid fuel in the State must register with Revenue. In the main, the obligation to register for solid fuel carbon tax applies to solid fuel importers and manufacturers based in the State. However, suppliers based outside the State must register with Revenue and pay solid fuel carbon tax where they deliver solid fuel into the State to a private individual. This means that suppliers from Northern Ireland, who take orders for delivery to private individuals in the State, are liable for solid fuel carbon tax and must register with Revenue. Approximately 5% of carbon tax registrations are suppliers based in Northern Ireland.

While Revenue cannot impose any obstacles to the free movement of solid fuels into the State from other member states and Northern Ireland, such imports are open to challenge by local authorities under the State's environmental standards regulatory regime. The Air Pollution Act 1987 (Solid Fuels) Regulations 2022, which were implemented in October last year, significantly enhanced the State's regulatory regime underpinning environmental standards for solid fuels. The regulations empower local authorities to take enforcement actions, including prosecutions, against solid fuel producers, importers, distributors, retailers and users to ensure all solid fuels placed on the market and used in the State comply with relevant standards. The regulations place specific obligations on anyone transporting solid fuels with accompanying documentation, detailing fuel source, destination and compliance with environmental standards, being required to be available for inspection by local authority staff.

I may read the rest of my contribution into the record when I speak again.

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