Billy Timmins (Wicklow, Fine Gael)
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Question 593: To ask the Minister for Finance the position in relation to VAT on home heating oil; if there were changes in this charge; and if he will make a statement on the matter. [2955/07]

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 all fuel products used for home heating and light are therefore 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. In Ireland the parked VAT rate equates to our reduced rate of 13.5%.

It would therefore be possible to reduce the VAT rate applicable to fuel and energy used for heat or light to 12%, for example, home heating oils, wood pellets, gas and electricity. Even if this reduction is passed on in full it would have a minimal impact on the price of such supplies. Altering the VAT structure by introducing a second reduced VAT rate would represent a fundamental change to the structure and operation of the VAT system, making administration more complex as well as increasing the administrative cost for the private sector. Indeed, Ireland is one of only 8 Member States that apply a reduced or parked rate to such goods. In the majority of Member States the standard VAT rate is applied to such goods which can mean rates of between 15% and 25%.

However, I would add that in the recent budget the Excise Duty on Kerosene and LPG was reduced to zero with effect from the 1st January 2007. This measure follows through on the commitment in last year's Budget when these rates were halved. This measure is estimated to cost €24 million in 2007.

It should also be noted that, late last year, in response to these energy price increases, the Government took steps to improve the social welfare Household Benefits Package scheme by increasing the amount of electricity or gas entitlements covered under the scheme. This will benefit over 340,000 social welfare recipients and cost almost €50 million.

Billy Timmins (Wicklow, Fine Gael)
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Question 594: To ask the Minister for Finance the position in relation to people in receipt of the old age pension who have had to open a bank account and obtain an ATM card to withdraw their pension but have received bills from the bank for €10 Government stamp duty for this service; if, in view of the fact that they needed the card in order to withdraw their money this fee can be waived for old age pensioners; and if he will make a statement on the matter. [2957/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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Stamp duty exists on various financial cards in order to provide Exchequer revenue. The stamp duty on cheques, bills of exchange and promissory notes has existed for many years and when electronic means of money transfers were subsequently introduced, stamp duty was gradually extended to these products to ensure that the stamp duty from cheques etc. was not eroded. The stamp duty applies irrespective of the volume of bank transactions made. I do not believe that these charges are either excessive or act as a disincentive for pensioners using financial institutions. In addition, the stamp duties on financial cards contribute significantly to the Exchequer and are in accordance with the overall taxation policy of widening the tax base in order to keep direct tax rates generally low. Accordingly, there are no plans to introduce exemptions to stamp duty on financial cards for any category of individual.