Paul Kehoe (Wexford, Fine Gael)
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Question 173: To ask the Minister for Finance the revenue taken in by his Department from VAT on gas, ESB and phone bills for the past twelve months; if he will provide a breakdown of the figures; and his plans to reduce the VAT rate to lesson the impact of inflation on these utility bills. [7845/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I am informed by the Revenue Commissioners that the information to be furnished on VAT returns does not require the yield from particular sectors of trade to be identified. It is, therefore, not possible to identify what portion of the net VAT received relates to sales of electricity, gas or telecommunications to domestic households. However, based on statistical data derived from non-Revenue sources, the expected revenue accruing from VAT on gas, electricity and telecommunications at the end of 2006 is as follows:

These figures would include VAT from unregistered and exempt businesses as well as domestic consumers. It should also be noted that the VAT content of purchases of gas, electricity and telecommunications is a deductible credit for business in the Irish VAT system.

The VAT rating of goods and services is subject to the requirements of EU VAT law with which Irish VAT law must comply. Supplies of electricity and gas are already subject to the reduced VAT rate of 13.5% and telecommunications services are subject to the standard rate of VAT of 21%. Under the VAT Directive Member States may retain the zero rates on goods and services, which have been in place since 1 January 1991, but cannot extend the zero rate to other goods and services. It is therefore not possible under EU law to apply a zero VAT rate to the provision of domestic utilities including electricity, gas and telecommunications. In the case of supplies of electricity and gas, under EU law, it would not be possible to reduce the rate applying to such products below 12%. Such a change in the reduced VAT rate, while having a significant Exchequer cost, would have little or no effect on the retail price of such products. In the case of telecommunications services, it would not be possible to reduce the VAT rate without reducing the rate applying to all goods and services to which the standard rate applies. This would have significant implications for the Exchequer. A reduction of 1% in the standard VAT rate would cost the Exchequer €415 million.