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Dáil
‹ Ceisteanna ó Cheannairí - Leaders' Questions

VAT, energy prices and cost of living

Summary

Deputy O'Donoghue argued that VAT and other taxes are inflating prices and crippling businesses and households. The Taoiseach replied that the crisis is driven by global energy shocks and the war in Ukraine, pointing to excise cuts, energy credits, health cost reductions and a forthcoming cost-of-living package.

As the Head of Government, will the Taoiseach explain to the people why the Government continues to take VAT on goods and services that are at an inflated rate? I will break it down into three simple examples and explain to him how his Government is crippling businesses in the country, putting our householders into poverty and going to drive the country into a recession.

The first example is one I gave him last year but I will give it again. The tax the Government takes on fuel, which is €57 of every €100, is based on tax once you break down all the different charges. At that time, I and the Rural Independents asked the Taoiseach to cap the price on which the Government would tax fuel. We understand the Government needs tax to run the country but it is taking tax at an inflated rate and getting in more earnings.

The second example is the cost of electricity. We saw recently that for the first six months of the year the ESB made a profit of €390 million. Over 12 months that will be €780 million. Under the laws that are there, the Government will automatically take 12% of that, which equates to approximately €93.6 million. The Government will take 12% in tax as it does from any company that makes a profit. The Government reduced the VAT on electricity to 9% but its intake is still up 30% on this time last year. I will break this down to simple brass tacks for the Taoiseach. Last year, a householder who used 1,341 units at a price of 13.2 cent per unit had a bill of €244.03. The same person today for the same usage will pay a bill, including VAT, of €457.83. The Government's 9% VAT take on that bill alone is up 30% on this time last year, so the Government loves inflation. Everyone else in this country is on the poverty line trying to survive. A business that had a €600,000 electricity bill last year is now faced with a €2.7 million charge this year. It employs 100 people and has told me it is not viable. Every business in the country is under pressure to put food on the table and keep the employment they have and our Government's VAT take on energy is up 30%. The Government is the only business in this country that is up 30%. Everyone else is down 30% as they try to keep people at work and have children go to school and college. What does the Government do? It has 30% more than it had this time last year.

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First, the Government is not a business.

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You can chalk that down again.

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That is an important point. The Government is not a business-----

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If you ran your business like I run mine, you would not be in business.

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The Taoiseach without interruption.

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We are facing the worst global energy crisis ever. It surpasses the 1970s.

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We are completely overtaxed.

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It was fundamentally brought about by the war on Ukraine; there is no question about it. The price today for United Kingdom gas on the wholesale markets is 287 pence. By the way, it was 463 pence last week.

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I am talking about tax, Taoiseach; VAT.

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Please let the Taoiseach answer.

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This day two years ago, the price-----

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-----was 40 pence a therm.

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That also illustrates what has happened in respect of gas prices and other energy prices.

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He will not answer.

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The future markets do not look good, either, as a therm of gas to be delivered in January will cost 533 pence and March deliveries are priced at 506 pence. That all indicates the enormous crisis not just Ireland but every country in Europe and, indeed, across the world by and large is currently facing.

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A big tax take.

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The Government has taken measures and we have reduced the excise duty on petrol, diesel and green diesel until mid-October. We will deal with issues in the budget relating to all of that. People save between €9 and €12 each time they fill their tank. We have also given energy credits back to people to cut their bills. I refer to the €2.5 billion basically that was allocated between the budget and the cost-of-living packages. We are planning a multibillion euro cost-of-living package now in the forthcoming budget to alleviate pressures on households, to protect jobs in terms of the cost of this crisis on enterprise itself, and to support a range of entities that provide services to the people in terms of education in particular, in terms of schools. The Deputy said Government loves inflation; Government hates inflation. Inflation corrodes people's disposable incomes but also damages the economy in the long run. It presents challenging issues to Government and is providing challenging issues to governments across Europe. The challenge for us is to maintain and, in some instances, expand services and reduce costs to families, which we will do and have done. We have reduced costs on public transport.

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If people have access to public transport.

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Lots of people do use public transport.

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For those people we have reduced costs. We have also reduced costs of health services. The drugs payment scheme, DPS, monthly threshold has gone to €80, which is a significant decline on what it was two years ago.

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It is amazing; he believes it himself.

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Through a variety of measures, including pay and tax reductions, we have taken efforts to reduce the pressure on the public and protect jobs. In the forthcoming budget and cost-of-living package we will take measures as well to alleviate the pressures on people who are feeling it heavily out there; there is no doubt about that.

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