Patricia Ryan (Kildare South, Sinn Fein)
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193. To ask the Minister for Finance his plans to address the rising cost of home heating oil; and if he will make a statement on the matter. [33405/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Government is acutely aware of the increase in consumer prices in recent months, especially the increase in fuel and other energy prices including home heating oil, and for this reason it designed a package of measures to alleviate the impact of increased energy prices on households.

The package of measures includes:

- an energy credit of €200 including VAT, estimated to impact just over 2 million households

- a lump sum payment of €125 on the fuel allowance paid to 390,000 recipients

- an additional lump sum payment of €100 paid to all households in receipt of the fuel allowance

- a temporary reduction in public transport fares of 20% from the end of April to the end of the year. This will impact approximately 800,000 daily users of Bus Éireann, Iarnród Éireann, Dublin Bus, Go Ahead, Luas, DART and Local Link services.

- a reduction of the Drug Payment Scheme from €144 to €80 benefitting just over 70,000 families

- the working family payment budget increase was brought forward from 1 June to 1 April

- reduced caps for multiple children on school transport fees to €500 per family post primary and €150 for primary school children.

This package of measures built on measures already introduced in Budget 2022, provides support to all domestic electricity users via the energy credit and also provides targeted support to vulnerable households via the welfare system. Low income households have received an overall increase of 55% in Fuel Allowance support provided during the most recent Fuel Allowance season as compared to the previous season taking the €5 increase in the weekly payment introduced as part of the Budget last October, the €125 lump sum payment provided earlier this year together and the €100 extra May payment.

The Government announced a temporary reduction in the excise duties charged on petrol, diesel and marked gas oil. This measure, 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 have been extended to 11 October 2022, with an additional 3 cent reduction for MGO. The extended measures will cost a further €97m.

In addition to these measures, the Government took the decision to reduce the rate of VAT on the supply of gas and electricity from 13.5% to 9% until October 31, 2022, costing an estimated €46m and resulting in estimated annual savings of €49 on gas and €69 on electricity bills for households. In relation to VAT on home heating oil, the position is that a reduced rate of 13.5% VAT currently applies to it. This rate is applied on the basis of a historical derogation from the standard VAT rate that should apply. The rate applied to domestic energy supplies such as oil and solid fuels is 13.5%. As this is a ‘parked’ rate it cannot be reduced below 12%.

The Government is of course very much aware of concerns regarding the ongoing impacts of increased energy prices and Government Departments will continue to monitor energy markets and consumer prices to ensure evidence based policy guidance in advance of Budget 2023.

In conclusion, I propose to keep the taxation of fuel including home heating oil under review as part of preparations for Budget 2023.

Patricia Ryan (Kildare South, Sinn Fein)
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194. To ask the Minister for Finance his plans to address the rising cost of petrol and diesel; and if he will make a statement on the matter. [33406/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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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 have been extended to 11 October 2022, with an additional 3 cent reduction for MGO. The extended measures will cost a further €97m.

It should be noted that the above changes were made within the constraints of the Energy Tax Directive (ETD). The ETD prescribes minimum tax rates for fuel with which all Member States must comply. ETD provisions on mineral oils are transposed into national law in Finance Act 1999 (as amended). Finance Act 1999 provides for the application of excise duty, in the form of Mineral Oil Tax (MOT), to specified mineral oils, such as petrol, diesel, and kerosene, that are used as motor or heating fuels.

In addition to the above rate changes, I also brought forward legislation in Finance Act 2021 to provide for a temporary reduction of 1 cent per litre inclusive of VAT to MOT on petrol and diesel . This reduction came into effect on 1 April. I took this step to partially offset the expected rise in fuel costs arising from an increase in the Biofuel Obligation for transport fuels proposed by my colleague the Minister for Transport. Both rate cuts will remain in place until 11 October this year.

MOT rates on petrol since Budget night last year are summarised in the table below, along with comparisons with the ETD minimum rate.

MOT rates on auto-diesel are summarised in the table below, along with comparisons with the ETD minimum rate. Current rates will remain in place until 11 October this year.

The Diesel Rebate Scheme (DRS) was introduced in 2013 with the aim of providing support to road haulage and bus transport operators when the retail price of diesel is relatively high. The DRS operates on a sliding scale basis, whereby a partial rebate of MOT is available when the retail price of diesel exceeds €1.00 per litre excluding VAT. The repayment rate increases gradually as the retail price increases, up to a maximum repayment rate of 7.5 cents per litre/€75.00 per 1,000 litres. At current retail prices the repayment rate is at this maximum.

It is important to note that the effective MOT rate on auto-diesel must be considered in ensuring compliance with the ETD. The effective rate includes the maximum MOT rate repayable under the Diesel Rebate Scheme (DRS), currently €75.00 per 1,000 litres. The current MOT rate on auto-diesel is €405.38 per 1,000 litres, which is €75.38 above the ETD minimum. However, when the DRS is taken into account, the effective MOT rate is €0.38 per 1,000 litres, or 0.038 cents per litre, above the ETD minimum, meaning that any material reduction in the effective MOT rate would be incompatible with EU law.

Any reduction in the VAT on fuel/petrol would require the standard rate of VAT (23%) to be reduced. The estimated cost of a 1% reduction is €542m annually.

In conclusion, I propose to keep the taxation of fuel under review as part of preparations for Budget 2023.