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

I move Financial Resolution No. 1:

(1)THAT for the purposes of the tax charged by virtue of section 95 of the Finance Act 1999 (No. 2 of 1999), that Act be amended, with effect as on and from 11 October 2023, by the substitution of the following for Schedule 2 to that Act: “SCHEDULE 2

Rates ofMineralOilTax

(2) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

Financial Resolution No. 1 provides for an extension of the temporarily reduced rates of non-carbon mineral oil tax. The current rate reductions are 8 cent per litre in respect of petrol, 6 cent per litre in respect of diesel, and 3.4 cent per litre in respect of marked gas oil, MGO. These were due to expire and return to full rates on 31 October 2023. I am now, however, extending them until 31 March 2024. This financial resolution also provides for a phased restoration of these reduced rates in two stages: a restoration of half of the reduced rates on 1 April 2024, that is, 4 cent per litre for petrol, 3 cent per litre in respect of diesel, and 1.7 cent in respect of marked gas oil. These figures are VAT inclusive. The balance will then be restored on 1 August 2024. The estimated cost of this measure is €171 million. These excise rate reductions are important in the context of current energy prices in 2022. In light of the acute impact rising prices are having on households and business, the Government provided for excise rate reduction in the order of 21 cent, 16 cent and 5.4 cent per litre on petrol, diesel and MGO, respectively. These temporary reductions were due to end initially on 31 August 2022 but, following a review and the monitoring of fuel prices, were extended until February 2023, with phased restoration beginning in June this year. Prices eased earlier this year compared to highs in June 2022, which allowed for partial restorations in June and September of the initial excise rate reductions. Given recent trends in fuel prices, I believe it is appropriate not to implement on 31 October 2023 the third phase restoration of excess rates but to extend them to 31 March 2024 to ensure that consumers of petrol, petrol diesel and MGO will continue to benefit from the relief of reduced rates of non-carbon mineral oil tax.

Financial Resolution No. 2 provides for an extension in the temporary reduction in VAT on gas and electricity. At present, gas and electricity have a 9% VAT rate applied on a temporary basis until 31 October this year. This rate is due to revert to 13.5% from 1 November. This temporary reduction was one of the Government responses to the current energy crisis and its impact on the cost of living. Given the scale and duration of the energy crisis, the Government has taken the decision to extend this temporary reduction in the VAT rate on gas and electricity. The VAT rate of 9% will now be extended from 1 November this year to 31 of October 2024.

The background to this measure is that up to April 2022, Ireland had maintained a historical derogation in respect of the VAT rate on gas and electricity of 13.5%. This derogation was necessary as otherwise the standard rate of VAT of 23% would have applied. However, following lengthy negotiations, amendments to the VAT directive were signed off in the first quarter of 2022, with the changes taking effect from 5 April 2022. Under this new agreement, Annex 3 of the VAT directive has been expanded to include gas and electricity. This means that Ireland can apply a reduced rate of 9% to these products, in line with other goods and services to which a reduced rate applies. The Government made its initial decision to avail of this flexibility from 1 May 2022 and is now extending it to 31 October 2024. With respect to revenue impacts, the 12-month extension of the reduced 9% VAT rate is estimated to cost €350 million.

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