Minister signals energy supports will end

/ 27th January 2023 /

Environment minister Eamon Ryan has given the strongest indication yet that a number of cost-of-living and energy supports will not be extended beyond next month.

The covernment cut excise duty by 20c per litre on petrol and 15c per litre on diesel and reduced VAT on electricity and gas from 13.5% to 9%, as part of a suite of measures to ease the inflationary squeeze.

Those supports are due to expire at the end of February, with Coalition leaders signalling they would meet before then to discuss a possible extension.

The Green Party leader has indicated that because of a warmer-than expected winter and a reduction in gas prices, the government must look at "restoring our tax base".

At Leaders' Questions in the Dáil, he said the wholesale price of gas had come down very significantly from what it was five or six weeks ago.

"In those circumstances, we do have to look at restoring our tax base because the benefit of excise and VAT is that it helps provide us a stable income that allows us pay for the pay increase in the public service which we need to deliver on," the minister stated.

While Taoiseach Leo Varadkar said there would not be a "cliff-edge" in relation to the cost-of-living supports, Ryan made it clear the basis for the cuts in taxes was not tenable any more, given the fall in prices for fuel in recent weeks.

Aontú leader Peadar Tóibín noted that the Exchequer is collecting record levels of VAT. Due to higher unit prices, the state pulled in €380m in VAT from electricity last year - a 40% increase on the previous year - despite reducing the tax rate.

energy supports
end — The Government cut excise duty by 20c per litre on petrol and 15c per litre on diesel and reduced VAT on electricity and gas from 13.5% to 9%

In all, the state collected €1.4bn in tax from electricity and fuel in 2022, which represents a rise of more than €300m, or 28%.

Tóibín commented: "The government should look to zero-rate the VAT on fuel this year in terms of the cost-of-living crisis, and while the pressure has come off in terms of record inflation, we're still seeing inflation that is multiples of normal levels.

"As a result, many people are finding it difficult to use their car and many are finding it difficult to heat their homes."

The reduction from 13.5% to 9% on VAT for gas and electricity was introduced at the beginning of May last year, initially until the end of October 2022. However, it was extended until end February 2023.