Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

I thank the Senator for his contribution and comments. I welcome the opportunity to highlight some important points on this matter.

The background is that the solid fuel carbon tax, SFCT, was provided for in the Finance Act 2010 and was commenced on 1 May 2013. The introduction of the solid fuel carbon tax was delayed to allow for a mechanism to be put in place to address the risk of coal products with lower environmental standards being sourced from outside the State. Regulations to enable local authorities to regulate and control the type of coal supplied in the State were put in place by the Minister for the Environment, Community and Local Government. The rate of tax is currently based on a charge of €20 per tonne of carbon dioxide emitted from the fuel concerned. This equates to €52.67 per tonne in the case of coal and ranges from €17.99 to €36.67 per tonne for peat and peat-based fuel products.

The yield from the solid fuel carbon tax in 2016 was in excess of €24 million. Revenue has responsibility for administering the solid fuel carbon tax and, as it does with all taxes and duties, takes a risk-focused approach in its deployment of resources on compliance activities.

Currently, there is no carbon tax on domestic solid fuel in Northern Ireland. This factor, combined with that jurisdiction's lower VAT rate on solid fuel and currency fluctuations, can give rise to significant price differentials for solid fuel between this State and Northern Ireland.

The solid fuel carbon tax applies on the first supply of coal and peat in the State and the tax is payable, on a bi-monthly basis, by a taxable person who is registered for VAT and making a first supply. Every supplier who intends to make a first supply of solid fuel in the State must register with Revenue. This obligation includes suppliers based in Northern Ireland who deliver solid fuel into the State to a private individual. However, solid fuel carbon tax is not payable by a Northern Ireland supplier where that supplier makes the supply at the premises in the North, nor is it payable by private individuals travelling to the North to buy solid fuel for personal consumption if the individual accompanies the fuel back into the State.

Revenue collects this tax on a self-assessment basis and enforces compliance by way of audit of solid fuel carbon tax returns. It is important to note that European Union Single Market constraints preclude the use of any cross-border movement controls in the administration of the solid fuel carbon tax. Therefore, Revenue has no authority to stop vehicles and physically inspect loads of solid fuel. Similarly, the transport or possession of solid fuel that originated in Northern Ireland are not, in themselves, Revenue offences and Revenue's officers have no authority to challenge such transportation or possession.

Collection of solid fuel carbon tax is heavily reliant on the regulatory regime for solid fuel established by the Department of Communications, Climate Action and Environment and enforced by local authorities. This regulatory framework covers the marketing, sale, distribution and burning of solid fuels in the State and sets out particular environmental standards for coal supplied in the State. These environmental standards are higher than those that apply in Northern Ireland. The regulations provide for the enforcement of the relevant environmental standards by local authorities. Local authorities have powers to inspect premises and vehicles being used for the sale and distribution of solid fuel; collect samples of coal to check for adherence to environmental standards; and prosecute traders involved in selling illicit coal. The regulations also provide for the establishment of a register of coal suppliers by the Environmental Protection Agency.

I am aware of concerns expressed by solid fuel traders, especially those located near the Border, relating to untaxed coal entering the State. My officials will continue to engage on this matter with the Department of Communications, Climate Action and Environment. As I have outlined, that Department is responsible in the first instance for regulating solid fuel in the State.