Olivia Mitchell (Dublin South, Fine Gael)
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Question 175: To ask the Minister for Finance the Government's view on the potential for taxation to play a role in promoting energy efficiency and emission reductions. [4160/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I have stated previously that taxation can play a part in attaining environment objectives which includes promoting energy efficiency and reducing emissions. Essentially this approach uses the tax system to provide incentives for certain behaviour. Such incentives include capital allowances for corporate investment in renewable energy projects which have been available since 1998, and the significant Biofuels excise relief scheme which I provided for in Finance Act 2006.

This latter Scheme will:

provide for excise relief on up to 163 million litres of biofuels per annum;

cost over €200m over 5 years;

result in CO2 savings of over 250,000 tonnes per annum;

meet a target of 2% transport fuel market penetration by biofuels by 2008;

help reduce our dependency on conventional fossil fuels: and

stimulate activity in the agricultural sector.

As a complementary measure, I provided in Finance Act 2006 for a new 50% VRT relief to promote new flexible fuel vehicles (cars designed to operate on biofuels) for an initial period of 2 years, and also extended the existing VRT relief for hybrid cars by a further year to end 2007. I also announced in this year's Budget the introduction of a VRT relief of 50% for electric cars — cars which can be propelled by a rechargeable battery — on a pilot one year basis with effect from 1 January, 2007.

In addition I announced in the Budget the commencement of a public consultation process on adjusting VRT to take account of CO2 emissions of vehicles. A similar exercise is under way in the area of motor tax. Any changes will have effect from a target date of 1 January 2008.

Liz McManus (Wicklow, Labour)
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Question 176: To ask the Minister for Finance his views on the fact that families who have to avail of agency nurses are liable to pay VAT on these services; and if he will make a statement on the matter. [41462/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I should explain that the supply of a nursing service by a qualified nurse comes within the remit of the First Schedule of the VAT Act 1972. This means they do not charge VAT on the services they provide and cannot recover VAT incurred on goods and services on their inputs. In order to qualify for exemption the person must be supplying "professional services of a medical nature in the course or furtherance of business". However, under EU VAT rules the supply of agency staff, for whatever reason, is fully chargeable to VAT at the standard rate of 21% as a service supplied by an employment agency.