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VAT on Energy Bills

On August 30th 2011 we wrote to the Minister for Finance to request his review of the level of VAT charge applying to energy bills.

The levels of increases in tariffs – electricity 14%: Gas 22% – present very serious budgetary challenges for a nation already struggling with increases in mortgages, rents, insurances, transport, school costs, college fees and more.

Our request is that he consider the introduction of a tiered level of VAT that would allow the maintenance of current VAT exchequer funding from bills but which would provide some relief and much needed confidence to all consumers in all homes across the nation by limiting the additional amount of VAT to be deducted.

With an average monthly electricity or gas bill of €100 the VAT recovered is €13.50. With increases as outlined above the VAT recovered would be €15.39 and €16.47 respectively.

We are asking for Minister Noonan’ consideration of a reduced rate to 9% on energy charges per month over €100 for a home. This would present a return for the higher bills, again as outlined above, of €14.76 and €15.48. In each case the Exchequer gains but with a reduction of €0.63 and 0.99 per bill that is saved by the consumer on the increased tariffs. Again, this will not be on all bills but simply the higher and, predominantly, family users.

The CAI recognises the necessity for increased revenue to balance the national budget and the double digit increases announced for electricity and gas will provide just such additional finance through this taxation.

However, our request is that he consider the difficulties encountered last winter and the reality that the extreme weather conditions are those that have placed many consumers in arrears and debt with their energy suppliers and will do so again in greater sums unless checked in some positive manner.

We indicated how we hoped the Minister would see merit in our request and further that we are available at any time to discuss these and any related matters.

Dermott Jewell

Chief Executive

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