Róisín Shortall (Dublin North West, Labour)
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Question 46: To ask the Minister for Finance if his attention has been drawn to the way in which the carbon tax has been applied to consumers bills; the reason this tax is applied to the standard charge and unit rate with an additional VAT rate charged on top of this total; if this is a form of double taxation; and if he will make a statement on the matter. [23939/10]

Noel Ahern (Dublin North West, Fianna Fail)
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Question 48: To ask the Minister for Finance in respect of carbon tax on ESB and Bord Gáis products, the guidance that was given to these utilities on the way carbon tax should be raised; the reason that VAT is being charged on carbon tax; if this tax on tax principle has been approved by Cabinet; if there has been discussions between Departments on the principle; if in the interest of fairness and in order to achieve public acceptance and understanding for carbon taxes general, if this tax on tax principle can be dropped; and if he will make a statement on the matter. [24070/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I propose to take Questions Nos. 46 and 48 together.

I announced in the Budget that a carbon tax at a rate €15 per tonne would be introduced on fossil fuels. It should be noted that a carbon tax came into effect on 10 December 2009 in respect of petrol and auto-diesel and from 1 May 2010 to kerosene, marked gas oil (also known as 'green diesel' or 'agricultural diesel'), liquid petroleum gas (LPG), fuel oil and natural gas. The application of the tax to coal and commercial peat is subject to a Commencement Order.

I am advised by the Revenue Commissioners that in accordance with section 10(1) of the Value-Added Tax Act 1972 (as amended), the amount on which Value-Added Tax is chargeable is the total consideration receivable by the supplier, "including all taxes, commissions, costs and charges whatsoever" but not including the Value-Added Tax itself.

VAT is an EU-wide tax and Irish VAT law must comply with the EU VAT Directives. Article 78 of EU Council Directive 2006/112/EC provides that the taxable amount shall include "taxes, duties, levies and charges, excluding the VAT itself".

Accordingly, it is correct to include any carbon tax element of a gas bill in the amount on which VAT is chargeable. The same situation applies in the case of other excises, including for example excises on petrol, auto-diesel, tobacco and alcohol products.

A Guide to Natural Gas Carbon Tax has been issued by the Revenue Commissioners and there were consultations on all aspects of the tax with natural gas suppliers in preparation for its implementation. In addition, guidance in relation to the VAT treatment of the total consideration receivable by a supplier is set out in the VAT Guide. Both publications are available on the Revenue website - www.revenue.ie.