Paul Connaughton Snr (Galway East, Fine Gael)
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Question 133: To ask the Minister for Finance if his attention has been drawn to the crippling cost of VAT on home heating oil; if his attention has further been drawn to the fact that there is €70 VAT on 300 litres of home heating oil; if his attention has further been drawn to the fact that this is a huge burden on the elderly; his plans to either reduce or remove the VAT; and if he will make a statement on the matter. [16764/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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Fuel prices, including home heating oils, are driven by a number of factors, such as the price of oil and gas on the internal markets, exchange rates, production costs and refining costs. The rise in fuel prices over recent periods reflect additional factors such as geopolitical uncertainty, supply disruptions and strong economic growth in countries such as China. Mineral Oil taxes are, of course, a factor influencing fuel prices.

I am informed by the Revenue Commissioners that the VAT on 300 litres of home heating oil amounts to approximately €24. In relation to the scope for reducing or removing VAT on supplies of heating oil to old age pensioners, the position is the VAT rating of goods and services is subject to the requirements of EU VAT law with which Irish VAT law must comply. In addition, the rate of VAT that applies to a particular good or service is determined by the nature of the good or service, and not by the status of the customer. The VAT treatment of heating oil is based on the fact that on 1 January 1991 it was taxed at the reduced rate which in Ireland is 13.5%. There is no provision in European VAT law that would allow for either the reduction or removal of VAT on supplies of home heating oil to old age pensioners.

In Budget 2006 I halved the excise rates for Kerosene and LPG used for home heating and also announced in advance that these excise rates will be reduced to zero in next year's Budget.