John Lahart (Dublin South West, Fianna Fail)
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71. To ask the Minister for Finance the cost of the VAT reduction to 9% in gas and electricity; and if he will make a statement on the matter. [20549/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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The estimated cost of the VAT reduction for gas and electricity to 9% from 1 May to 31 October is €46m. This is expected to result in estimated annual savings of €49 on gas and €69 on electricity bills for households.

The background to this change is the introduction of greater flexibility in Annex III of the VAT Directive which now provides that reduced rates can be applied to the electricity and gas sectors. Previously, this had not been the case and Ireland was only able to apply the 13.5% rate as a result of a historical derogation that allows us to maintain reduced rates to certain supplies under Article 118 of the VAT Directive. These are known as parked rates and cannot go below 12%.