Tommy Broughan (Dublin North East, Labour)
Link to this: Individually | In context | Oireachtas source

109. To ask the Minister for Finance if he will consider reducing the rates of excise duty or VAT charged on home heating oil due to the continued increases in the price of this product which are causing financial hardship for many families. [19524/14]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I am advised by the Revenue Commissioners 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 reduced VAT rate of 13.5% applies to the supply of home heating oil, and gas and electricity in Ireland.  The majority of EU Member States apply a much higher VAT rate to the supply of home heating oil as EU VAT law provides that the standard VAT rate should apply to these services.  However, as part of a derogation to EU VAT law, Ireland is entitled to retain a reduced rate to the supply of home heating oil on the basis that we applied a reduced rate to the supply of domestic fuels on 1 January 1991.  However, under this derogation the VAT rate may not be reduced below 12%.  While it is possible, therefore, to reduce the VAT rate on home heating oil to 12%, under EU VAT law this would have to apply to all activity currently applying at the 13.5% rate and as a result would be very costly to the Exchequer.

With regard to excise rates on home heating oil the rates currently applicable for diesel and kerosene used for home heating are €102.28 per 1,000 litres and €50.73 per 1,000 litres, respectively. 

Ireland, as with other countries, has experienced an increase in fuel prices. This increase is an international phenomenon. Fuel prices are driven by a number of factors including the price of oil on international markets, exchange rates, production costs and refining costs. The rise in oil prices over recent periods reflected additional factors such as geopolitical uncertainty in Northern Africa and the Middle East with potential supply disruptions. The Exchequer yield from excise, as excise is set at a nominal amount, does not increase as the price of fuels increase.  I have no plans, therefore, to reduce the rates of VAT or excise duty on home heating oil.

Clare Daly (Dublin North, Socialist Party)
Link to this: Individually | In context | Oireachtas source

110. To ask the Minister for Finance the reason that pre-1995 public service occupational pensions are not exempt from the USC, but those post-April 1995 are; his views on whether exempting an amount equivalent to the State pension for those pre-1995 would be a more equitable solution. [19558/14]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The USC was introduced in Budget 2011 to replace the Income Levy and Health Levy. It was a necessary measure to widen the tax base, remove poverty traps and raise revenue to reduce the budget deficit. It is a more sustainable charge than those it replaced.  It is applied at a low rate on a wide base. 

The USC, like the Income Levy before it, does not apply to social welfare payments or payments of a similar nature.  However, all occupational pensions are liable to the USC, if the payment is greater than the exemption limit, which from 1 January 2012 is €10,036 per annum. This is true of both pre and post 1995 public service and all private sector occupational pensions. However, in practice, post 1995 public service occupational pensions comprise of the relevant social protection pension rate and a top up occupational pension amount where applicable.

The Deputy may be aware that delivering on a commitment in the Programme for Government, the USC was reviewed by my Department in the lead up to Budget 2012. The report is available at www.finance.gov.ie. The issue of USC applying to occupational pensions of retired public servants who entered the public service before April 1995 was examined.  However, the Government decided not to exempt the occupational pensions of these individuals from the USC charge as it would be very costly and difficult to achieve, as it would involve all income earners with the equivalent income benefiting from the exemption.  In addition, it would also undermine the principle of the USC being applied to income with few exemptions. However, as a result of the review of the USC, the Government decided in Budget 2012 to increase the entry point to the Universal Social Charge from €4,004 to €10,036 per annum. It is estimated that this removed almost 330,000 individuals from the charge, some of whom may be retired public servants who entered the public service before April 1995. 

As you will appreciate, as Minister for Finance, I receive numerous requests for exemptions from taxation. You will also appreciate that I must be mindful of the public finances and the many demands on the Exchequer given the significant current budgetary constraints. Tax exemptions, no matter how worthwhile in themselves, reduce the tax base and make general reform of the tax system that much more difficult.