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Written Answers - Tax Code

Tuesday, 27 March 2012

Dáil Éireann Debate
Vol. 760 No. 3

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 137.  Deputy Michael McCarthy Information on Michael McCarthy Zoom on Michael McCarthy  asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan  if a person (details supplied) in County Cork is liable to pay the universal social charge; and if he will make a statement on the matter. [16574/12]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan I am advised by the Revenue Commissioners that their records indicate that this individual is not exempt from the Universal Social Charge (USC) based on the quantum of his income, as returned by his employer. An individual becomes liable for USC once their income, excluding social welfare payments, exceeds €10,036 per annum.

 138.  Deputy Robert Troy Information on Robert Troy Zoom on Robert Troy  asked the Minister for Finance in view of Information on Michael Noonan Zoom on Michael Noonan  the escalating price of petrol at the pumps, if he will considering reducing excise duty. [16589/12]

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 153.  Deputy Michael Healy-Rae Information on Michael Healy-Rae Zoom on Michael Healy-Rae  asked the Minister for Finance Information on Michael Noonan Zoom on Michael Noonan  his views on a matter (details supplied) regarding taxation issues; and if he will make a statement on the matter. [16823/12]

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan I propose to take Questions Nos. 138 and 153 together.

Ireland, as with other countries, has experienced an increase in the cost of petrol and auto-diesel. The increase in fuel prices is an international phenomenon. Fuel prices are driven by a number of factors including the price of oil on international markets, exchange rates, production costs and refining costs. The rise in oil prices over recent periods reflected additional factors such as geopolitical uncertainty in Northern Africa and the Middle East with potential supply disruptions.

The excise rates (including the carbon charge) in Ireland on motor fuels are 58.8 cent per litre of petrol and 47.9 cent per litre of auto-diesel. However, our rates remain lower than many of our main trading partners and significantly lower than our nearest neighbour the UK. The rates for petrol and auto-diesel were increased with effect from 7 December 2011, arising from an increase in the carbon charge for those fuels from €15 to €20 per tonne of CO2 emitted. This represented an increase of less than 1.5 cent per litre in the case of petrol and just over 1.5 cent per litre in the case of diesel, when VAT is included. The rate of VAT that applies to those fuels increased from 21% to 23% with effect from 1 January 2012.

The Exchequer yield from excise, as excise is set at a nominal amount, does not increase as the price of fuels increase. On the other hand, the yield from VAT per litre of fuel, as VAT is set as a percentage of the price, increases as the price of fuels increase. However, in this regard it should be borne in mind that to the extent that spending in the economy is re-allocated to petrol and other oil products, and away from other VAT liable spending, and to the extent that the overall level of economic activity is reduced by higher oil prices, there may be little or no net gain to the Exchequer.

It should also be noted that businesses are of course entitled to reclaim VAT incurred on their business inputs, including VAT incurred on fuel. For example, VAT incurred on auto-diesel and marked gas oil (MGO or green diesel) used in the course of business is a deductible credit for business in the Irish VAT system. VAT on petrol cannot be deducted/reclaimed.

There are no plans for temporary taxation adjustments, as to do so, could lead to significant costs to the Exchequer. The issue of rising fuel prices was discussed by EU Finance Ministers at an ECOFIN meeting last year where they reconfirmed the approach taken in 2005 and again in 2008, when oil prices were very high, which endorsed a coordinated approach towards not making distortionary fiscal adjustments.


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