Eamon Ryan (Dublin Bay South, Green Party) | Oireachtas source

I thank the Deputies for their contributions today and on Tuesday. As Deputies said throughout this debate, there is significant financial pressure on households and businesses as a result of continued high energy prices. The Government is aware of this, and as previously stated, has introduced a range of measures and supports. I am confident the legislation before the House today will provide for a fair collection of revenues from fossil fuel companies, which have generated unexpected surplus revenues as a result of the war in Ukraine. The collection of these temporary solidarity contribution proceeds can then be distributed to alleviate some of this financial pressure on energy consumers. Governments in other members states have introduced this temporary solidarity contribution before now. However, had this Government implemented a temporary solidarity contribution in a similar manner to other member states, the result would have been that little if any contribution would have been collected and distributed to energy customers.

Through this Bill, the Government is seeking maximise the collection of a temporary solidarity contribution while balancing concerns about security of energy supply and impacts on future energy investment. The Bill also provides robust powers to the Revenue Commissioners to ensure timely and efficient collection of a temporary solidarity contribution. It is important legislation that demonstrates the Government's commitment to collect revenue from windfall gains generated by companies as a result of high energy prices. These can then be distributed to households and businesses that have been negatively impacted by those same high energy prices.

I will now respond to some of the questions and issues raised by Deputies. Deputy O'Rourke queried the deduction of losses incurred on capital expenditure from contributions. Losses from before 1 January 2018 and after 31 December 2023 cannot be deducted from the temporary solidarity contribution, and will not be taken into account in the calculation of the TSC. This will increase the revenue collected. Losses within the baseline period of 2018 to 2021 used to calculate the temporary solidarity contribution can be taken into account. However, if the average taxable profits for 2018 to 2021 is negative, then for the purpose of calculating the amount of temporary solidarity contribution, the average tax for profits shall be zero, and not the negative figure. In effect, this would lead to the 75% rate being applied to all profits generated by a company that has been loss making in the baseline period. It would not benefit from the 20% increase on average taxable profits in the temporary solidarity contribution period. There is an allowable deduction for capital expenditure incurred on the acquisition or construction of tangible assets in the years 2018 to 2023 that meet certain criteria. This deduction is proposed as a measure to address concerns of impacts on security of energy supply and investment in capital works.

Deputy Whitmore queried the rationale for the 75% rate for the temporary solidarity contribution. If the temporary solidarity contribution were to be levied at a rate of 33%, it would not collect a significant portion of the windfall gains. For instance, if profits doubled, an increase of 200%, then a 33% rate would only apply to 80% of the increase, as a 20% increase is allowed for. It would thus only collect 26% of the increase in profits. In contrast, the cap on market revenues, also provided for in the Council Regulation (EU) 2022/1854, is effectively a 100% charge on windfall revenues above a threshold. This would collect a significant proportion of the windfall gains. A rate of 75% for temporary solidarity contribution is considered fair and appropriate, to ensure that where significant windfall gains are made, a substantial portion of those windfall gains will be collected by the State without impacting on energy security or investment. As the Deputy mentioned on Tuesday, this Government's rate is in excess of the majority of other countries in the EU. The 75% rate is one the highest, if not the highest rate, for temporary solidarity contribution being applied in Europe.

I understand Deputy Tóibín raised a separate issue with regard to my invitation or otherwise to Tara Mines. I reassure him that I never at any stage refused an invitation. In fact, I was due to visit the mines prior to the closure. I will work with my colleagues across Government to make sure we see them back in production as soon as we can.

Questions were also raised about when the allocated revenues would be redistributed. I expect that is something we will be able to achieve in the autumn period once we have seen how some of the first period revenue is collected. Deputies also raised the question as to why there are two separate Bills for dealing with the solidarity contribution. In the early autumn we will be dealing with the market cap legislation. The honest response is that they were complex pieces of legislation. To deliver them in a timely manner, it was decided to introduce the solidarity contribution Bill first, and then follow with the publication of the second Bill, which I expect will be before the summer recess. I look forward to introducing it in the House in the autumn. They are separate and distinct in their effect, and I do not think it takes from either that they come in separate timeframes.

Deputies also raised concerns about the energy market, at both European and national levels. They set out the need for reform, and the resourcing of the Commission for Regulation of Utilities, CRU. This Bill is not the legislative vehicle to address those concerns, but I understand such concerns. I am aware that the European Commission recently published a proposal to revise the rules for electricity market design. The Commission for Regulation of Utilities is an independent statutory regulator, whose functions include regulation and reform of the electricity market, regulation of the natural gas market, security of supply, consumer protection, upstream and downstream gas and electricity safety and economic regulation of water services. The CRU is legally independent in the performance of its functions and is entirely accountable to the Oireachtas.

Deputies raised concerns about the actions of the Government to address the impact of high energy prices on households and businesses. I reiterate that this Government acknowledges this negative impact. In recognition of this, a €2.4 billion package of supports was introduced during 2022, and an additional package of one-off measures worth €2.5 billion was introduced in budget 2023.

In February, the Government announced a €1.2 billion package to help families, businesses, pensioners, carers, and people with disabilities. There is a simplified application process for the temporary business energy support scheme, and the level of relief has been increased to 50% of the cost of the eligible energy bills. Between the first and second electricity benefit schemes, more than 2.1 million households will have automatically received €800 of income support through their electricity bill at a total cost of €1.59 billion between quarter 2 last year and quarter 2 this year. In 2023, a total of €235 million will be spent on Sustainable Energy Authority of Ireland, SEAI, dedicated energy poverty schemes and local authority retrofits. This funding will target some 6,000 free upgrades and the warmer homes schemes, and a further 2,400 B2 retrofits of local authority homes next year.

The Bill before the House seeks to maximise the collection of temporary solidarity contribution from windfall gains made from fossil fuel production and refining activities while balancing energy security and investment concerns. The current estimated proceeds, which are €200 million to €450 million, must be distributed in accordance with the Council regulation. The cross-departmental energy poverty steering group will be consulted on the distribution of proceeds and the specific nature of these distribution measures will be agreed by the Government in the context of budget 2024.

I acknowledge the significant work of the Attorney General, his officials and officials in the Revenue Legislation Services who worked with my Department to draft this important legislation. I also thank the members of the Joint Committee on Environment and Climate Action for their work on the pre-legislative scrutiny of the general scheme of the energy windfall gains in the energy sector Bill. I thank the Deputies for their interest and look forward to discussing the Bill in further detail on Committee Stage. I commend the Bill to the House.

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