Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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Question 488: To ask the Minister for Finance the average annual cost to the exchequer of reducing the VAT on wood fuel products from the present 21 per cent to 4.3 per cent. [28706/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The position is that the VAT rating of goods and services is subject to the requirements of EU VAT law with which Irish VAT law must comply.

The supply of wood fuel products used for home heating and light are already subject to the reduced VAT rate of 13.5% under Article 28 (2e) of the Sixth VAT Directive. This means that Member States had the option of maintaining, at a reduced rate of not less than 12%, any items not listed in Annex H of the Sixth VAT Directive, provided these items carried a reduced rate on 1 January 1991. Ireland is one of only eight Member States that apply a reduced or parked rate to the supply of wood fuel products. In Ireland the parked VAT rate equates to our reduced rate of 13.5%.

In relation to providing an estimate for the average annual cost to the Exchequer of reducing the VAT on wood fuel products from 13.5% to 12%, I am informed by the Revenue Commissioners that it is not possible to furnish figures of the VAT take on wood fuel products, as the information furnished on VAT returns does not require this to be identified.

Finally, it should also be noted that where the VAT content of such purchases is a business input, these are treated as a deductible credit for business.