Jim O'Callaghan (Dublin Bay South, Fianna Fail)
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191. To ask the Minister for Finance if biofuels are regarded as fossil fuels for the purpose of carbon tax; and if he will make a statement on the matter. [56612/22]

Fergus O'Dowd (Louth, Fine Gael)
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192. To ask the Minister for Finance if a response will issue to matters raised by a company (details supplied) in respect of the taxation of biofuels; and if he will make a statement on the matter. [56630/22]

Colm Burke (Cork North Central, Fine Gael)
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196. To ask the Minister for Finance if he will confirm that biofuels will not be subject to carbon tax or excise duty if they are used for heating; and if he will make a statement on the matter. [56157/22]

Catherine Murphy (Kildare North, Social Democrats)
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207. To ask the Minister for Finance if he will clarify his taxation policy for biofuels; and if biofuel value added tax and levies will be amended. [56437/22]

Jennifer Murnane O'Connor (Carlow-Kilkenny, Fianna Fail)
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209. To ask the Minister for Finance the proactive and immediate steps that his Department is taking to address the excessive duty on hydrotreated vegetable oil; if biofuels that are used for heating will not be subject to carbon tax or excise duty (details supplied); and if he will make a statement on the matter. [56527/22]

Marian Harkin (Sligo-Leitrim, Independent)
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213. To ask the Minister for Finance the plans that he has explored in order to introduce a new taxation policy on biofuels; if carbon tax will be applied to biofuels; and if he will make a statement on the matter. [56635/22]

Éamon Ó Cuív (Galway West, Fianna Fail)
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214. To ask the Minister for Finance the present carbon tax and excise duty charged on biofuels used for home heating; if he intends eliminating the carbon tax and excise duty on these biofuels when used as a substitute for diesel or kerosene as home heating oil in order to encourage a reduction in Ireland's carbon emissions; and if he will make a statement on the matter. [56652/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 191, 192, 196, 207, 209, 213 and 214 together.

Ireland’s taxation of fuel is governed by European Union law as set out in Directive 2003/96/EC, commonly known as the Energy Tax Directive (ETD). The ETD prescribes minimum tax rates for fuel with which all Member States must comply. There are three national legislative frameworks which provide for the charging of excise duty on different fuel types in the State. Firstly, ETD provisions in relation to liquid fuels used for motor or heating purposes are transposed into national law in Finance Act 1999. This law provides for the application of excise duty in the form of Mineral Oil Tax (MOT) to liquid fuels. It also provides for the application of MOT to natural gas used for propellant purposes, referred to as Mineral Oil Tax on Vehicle Gas (MOTVG). Secondly, Natural Gas Carbon Tax (NGCT) law, as set out in Finance Act 2010, provides for the taxation of natural gas used for non-propellant purposes. Finally, regarding solid fuel, the ETD mandates that coal be subject to taxation. Finance Act 2010 provides for Solid Fuel Carbon Tax (SFCT) to apply to coal and also to peat and peat products.

MOT is comprised of a non-carbon component and a carbon component with the carbon component being commonly referred to as carbon tax. The non-carbon component of MOT is often referred to as “excise”, “fuel excise”, “fuel tax” or “fuel duty” but it is important to note that both components are part of MOT which is an excise duty. NGCT and SFCT are also excise duties, but they are “pure” carbon taxes in that they do not comprise any non-carbon component. Carbon tax rates are based on charging an amount per tonne of carbon dioxide emitted on combustion of the fuel concerned. Fuels with higher carbon dioxide emissions attract higher rates of carbon tax than fuels with relatively lower emissions. Currently carbon tax rates for propellant fuels, such as petrol and auto-diesel, are based on charging €48.50 per tonne of carbon dioxide emitted. The carbon dioxide emissions basis for non-propellant fuels, including those used for heating purposes, is currently €41.50 per tonne. MOT, NGCT and SFCT rates are published on the Revenue website at www.revenue.ie/en/tax-professionals/tdm/excise/excise-duty-rates/energy-excise-duty-rates.pdf

Some of the Deputies who have raised questions have indicated that a fuel used for heating purposes is being taxed as a road fuel. This is not the case. The ETD allows for the application of reduced levels of taxation to fuels used for non-propellant purposes. Under MOT law reduced rates of tax apply to certain fuel uses, such as heating. These reduced rates are significantly less that the standard rates that apply to propellant uses. For example, auto-diesel is currently subject to the standard MOT rate of €425.45 per 1,000 litres whereas diesel used for non-propellant purposes, including heating, attracts the reduced rate of €111.14 per 1,000 litres.

Under MOT law a liquid, other than a specified mineral oil, that is used for motor or heating purposes is regarded as a substitute fuel. Where a substitute fuel is used in place of a propellant fuel, it is subject to MOT at the MOT rate that applies to the fuel it is used in place of. For example, a substitute fuel used in place of auto-diesel in a motor vehicle would be taxed at the MOT rate for auto-diesel. A substitute fuel used for non-propellant purposes such as heating is chargeable, under section 96(2A)(c) of Finance Act 1999, at the MOT rate that applies to Marked Gas Oil (MGO), currently €111.14 per 1,000 litres.

In addition to the reduced rate of MOT applicable to non-propellant uses, a relief from the carbon component of MOT is available, under section 100(5) of Finance Act 1999, for all uses of liquid biofuels. Section 100(5A) provides for a similar relief for biogas used as a propellant. Biofuels and biogas are defined in MOT law as substitute fuels made from biomass, with biomass being defined as the biodegradable fraction of products, waste and residues from agriculture (including vegetal and animal substances), forestry and related industries, as well as the biodegradable fraction of industrial and municipal waste. Sections 100(5) and 100(5A) of Finance Act 1999 provide for a MOT carbon component, i.e. carbon tax, relief for biofuels. This means that a biofuel, such as Hydrogenated/Hydrotreated Vegetable Oil (HVO), produced entirely from biomass, is liable for the non-carbon component of MOT only. As already outlined, a substitute fuel used for heating purposes attracts the MGO rate of €111.14 per 1,000 litres. This rate is entirely comprised of carbon tax. Therefore, if the substitute fuel is a biofuel that qualifies for relief, the MOT is fully relieved, i.e. no MOT applies. With regard to blended fuels produced partially from biomass, the relief applies to the portion of fuel that meets the biofuel criteria set out in MOT legislation.

The MOT carbon tax relief for biofuels is intended to promote a higher level of biofuel usage for motor and heating purposes and supports Government’s commitment to incentivising more environmentally friendly alternatives to fossil fuels. As the carbon component of MOT is fully relieved for biofuels, these types of fuels are not impacted by the ten-year trajectory of carbon tax increases which was introduced in Finance Act 2020. This means that, as annual increases in the carbon component of MOT are implemented, the differential in tax costs between biofuels and fossil fuels will continue to widen, further incentivising the uptake of biofuels.

As already mentioned, biogas used for propellant purposes qualifies for relief from the MOT carbon component. Natural gas used for non-propellant purposes is subject to NGCT at a rate of €7.41 per megawatt hour at gross calorific value. Biogas falls outside the scope of NGCT meaning that where it is used for non-propellant purposes it is not subject to fuel taxation.

With regard to SFCT, a partial relief is available for biomass products. For the purposes of SFCT, biomass products are defined as any solid fuel product with a biomass content of 30 per cent or more. The rate of SFCT relief depends on the biomass proportion of the product and full details are published on the Revenue website at www.revenue.ie/en/companies-and-charities/excise-and-licences/energy-taxes/solid-fuel-carbon-tax/rate-of-tax.aspx

As this explanation shows, all three of the State’s legal frameworks providing for the taxation of fuels, as governed by the ETD, relieve or exclude fuels produced from biomass from carbon tax. This reflects a clear policy intention that the use of such fuels be incentivised. In particular, liquid biofuels, such as HVO, that are used for heating purposes qualify for carbon tax relief which means that the effective rate of MOT applicable is currently zero. In order to understand and address any potential misinformation circulating about this matter Revenue was recently in touch with the oils industry and is currently preparing some further clarificatory information on biofuels and MOT to be published on its website in the coming days. I am further advised that Revenue’s “Mineral Oil Tax Warehouse Return User Guide” provides details for the industry on how biofuels blended with other fuels are to be accounted for. This guide is published at www.revenue.ie/en/companies-and-charities/documents/excise/energy-taxes/mineral-oil-tax-warehouse-return-user-guide.pdf

With regard to VAT, the VAT rating of goods and services is subject to 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 Annex III of the Directive, in respect of which Member States may apply either one or two reduced rates of VAT. Ireland currently operates two reduced rates of VAT, 13.5% and 9%, as permitted by the Directive. Biofuel, petrol including bio-ethanol petrol blends and auto-diesel are not included in the categories of goods and services on which the EU Directive allows a lower rate of VAT or an exemption to be applied, and so they are liable to VAT at the standard rate, currently 23%. Non-food vegetable oils, such as HVO, used to fuel vehicles also attract the standard rate of VAT. HVO used as heating fuel is liable for the reduced VAT rate of 13.5%.

A levy is applied on biofuels placed on the market within the State. The rate of the biofuels levy is currently 0.1 cent per litre (a tenth of a cent) and is collected by the National Oil Reserves Agency (NORA). The rate was reduced from 2 cent per litre, by way of the NORA (Amendment) and Provision of Central Treasury Services Act 2020.

The rate of the biofuel levy was reduced to incentivise the use of biofuels, by helping to bridge any cost differentials between biofuels and fossil fuels, where they exist. The levy proceeds continue to make a contribution towards the running costs of National Oil Reserves Agency – in particular the administration of the Renewable Transport Fuels Obligation Scheme.

Neasa Hourigan (Dublin Central, Green Party)
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193. To ask the Minister for Finance the reason that the reduction on VAT on newspapers from 9% to zero was not extended to periodicals; and if he will make a statement on the matter. [56114/22]

Steven Matthews (Wicklow, Green Party)
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194. To ask the Minister for Finance if a 0% VAT rate has been considered for Irish published magazines, similar to what is proposed for newspapers as of January 2023; and if he will make a statement on the matter. [56119/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 193 and 194 together.

Given the critical role that newspapers play in our society at both local and national level, and the very challenging environment they have to operate in, I made the decision that the VAT rate on newspapers and electronically supplied newspapers be reduced from 9% to zero from 1 January 2023.

This measure has an estimated annual cost of €33m. The rate reduction is in line with the Government’s commitment to support an independent press and the Future of Media Commission’s recommendation on this matter.

Magazines and other publications such as news periodicals are not covered by this zero-rating. Therefore the second reduced rate of VAT of 9% will continue to apply to such periodicals.

Any move to zero-rate for periodicals would require the legislation to cover all periodicals in line with the principle of fiscal neutrality. This would mean that weekly magazines and sectoral publications covering sport, entertainment, fashion, health, etc. that are published regularly or occasionally would come within the scope of the zero rate of VAT.

The inclusion of periodicals because of its broad nature would increase the estimated cost of this measure by approximately €15m.