Written answers

Thursday, 28 April 2022

Department of Finance

Tax Code

Photo of Jackie CahillJackie Cahill (Tipperary, Fianna Fail)
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6. To ask the Minister for Finance if he intends to extend the timeframe for the reduction in excise duties on petrol, diesel and marked gas oil; and if he will make a statement on the matter. [20571/22]

Photo of Joe FlahertyJoe Flaherty (Longford-Westmeath, Fianna Fail)
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26. To ask the Minister for Finance the estimated cost of the recent cuts to excise duties on petrol, diesel and marked gas oil; and if he will make a statement on the matter. [20524/22]

Photo of Barry CowenBarry Cowen (Laois-Offaly, Fianna Fail)
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61. To ask the Minister for Finance if he has plans to further reduce excise duties on petrol and diesel; and if he will make a statement on the matter. [20522/22]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 6, 26 and 61 together.

The Government is very aware of the impact of rising fuel prices on households and businesses. These trends are driven primarily by global factors. The key drivers of this increase are increases in wholesale energy prices as a result of the rapid rebound in global demand, global supply chain disruptions and the imbalance between demand and supply that emerged as economies re-opened.More recently, as a result of the war in Ukraine, oil and gas prices have risen further. It is not possible for the Government to fully insulate consumers against these price impacts, however, a number of very significant steps have been taken to lessen the impact of increased fuel prices.

On fuel excise, a package of measures, to the value of €320 million, was introduced with effect from 10 March reducing the VAT inclusive excise duty on petrol, diesel and MGO by 20, 15 and 2 cent per litre respectively. These reductions mitigate the cost of a fill of a 60 litre tank by some €12 for petrol and €9 for diesel. This assists all transport users, rural and urban, including commuters, business and farmers. These measures are now being extended to 12 October 2022, with an additional 3 cent reduction for MGO. The extended measures will cost a further €97m.

Energy taxation in Ireland is governed by the Energy Taxation Directive, which sets out excise duty rules covering all energy products in the EU used for heating and transport, as well as electricity. The Directive sets out minimum levels of taxation applicable to these energy products for specific fuel uses.For diesel used as a propellant, the minimum rate is €330.00 per 1000 Litres exclusive of VAT. This equates to 33 cents per litre.

The March 9th(pre reduction) rate on MOT on diesel was 53.55 cent per litre.The subsequent reductions have brought the overall MOT rate to 40.54 cents per litre. The Diesel Rebate Scheme operates a price cap of 7.5 cent per litre bringing the effective rate of excise paid to 33.04 cents for those availing of the relief.

For this reason, it is not possible to reduce the rate on MOT on diesel by any more than 15 cents VAT inclusive.

Photo of Peadar TóibínPeadar Tóibín (Meath West, Aontú)
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8. To ask the Minister for Finance if Ireland or Europe imposes any tax on fertiliser or the sale of agricultural fertiliser; if so, the percentage breakdown of this tax; if any environmental taxes are imposed on the sale or purchasing of fertiliser; and if the Government have plans to impose such a tax. [21258/22]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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I am advised by Revenue that the VAT rating of goods and services is subject to the requirements of EU VAT law, with which Irish VAT law must comply. In general, the EU VAT Directive provides that all goods and services are liable to VAT at the standard rate, unless they fall within categories of goods and services specified in Annex III of the VAT Directive, in respect of which Member States may apply a lower rate from VAT. Within its rates structure, the EU VAT Directive also allows for historic VAT treatment to be maintained under certain conditions on certain goods and services not provided for in Annex III.

Currently Ireland has a standard VAT rate of 23% and two reduced rates of 13.5% and 9%. Ireland also holds a number of derogations, under which is it permitted to retain some historic VAT arrangements, under strict conditions.

On this basis, the zero rate of VAT applies to the supply of fertiliser including agricultural fertiliser, provided such fertiliser is supplied in units of not less than 10 kilos; otherwise, the standard rate of VAT applies. No carbon tax is applied on the sale or purchase of fertiliser.

I have no proposals to change the current VAT arrangements in this area at the moment.

Photo of Mick BarryMick Barry (Cork North Central, Solidarity)
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9. To ask the Minister for Finance if he will support measures to levy corporate landlords' profits to assist in funding social and affordable housing in view of the level of profits and the dominant position of corporate landlords; and if he will make a statement on the matter. [12111/22]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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This Government is providing record levels of State investment for all forms of housing. Housing for All is the Government’s plan to increase availability and affordability of housing, and to create a sustainable housing system into the future. This year, €4 billion of Exchequer funding, supplemented by Land Development Agency funding and Housing Finance Agency lending, will be made available to deliver 9,000 new-build social homes and make 4,130 homes available for affordable purchase and Cost Rental. Over 300,000 new homes will be built by 2030, including a projected 54,000 affordable homes for purchase or rent and over 90,000 social homes.

However, Government expenditure alone cannot meet the projected housing needs in the State. Investment by large-scale corporate landlords is critically important to generating additional supply and improving affordability. The Deputy’s proposal of an additional levy on corporate landlords' profits could act as a deterrent to the crucial participation of non-bank finance in the housing market. It should be noted that much of the investment by these large scale landlords is in the form of forward commit transactions - that is, the provision of capital to fund the construction of new dwellings or binding purchase contracts to enable financing - thereby directly supporting additional supply.

Notwithstanding their increased activity in the property market, it must also be acknowledged that institutional investors still account for a relatively small share in the context of the wider residential housing market, far below a dominant market share. According to CSO data, the Real Estate sector (a close proxy for institutional investors) which includes property funds and real estate investment trusts, accounted for just 3% of the purchases of all dwellings in 2020 and 6% of the purchases of new dwellings. According to CBRE, institutional investors owned approximately 20,000 properties in 2020, accounting for less than 1% of the total housing stock.

The relevant Government Departments will, on a bi-annual basis, assess the adequacy of funding available from all sources - including the domestic and international banking sector, capital markets and international capital - to complement public investment in order to meet the demand for homes across the various tenures.

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