Measures will more than offset increases from Carbon Tax
The Government today agreed to a number of new measures to help address the rising costs of energy. They include:
- VAT on gas and electricity will be cut from 13.5% to 9% until the end of October;
- Excise reductions on petrol, diesel and green diesel will also be extended to Budget Day;
- 370,000 Fuel Allowance recipients will receive a €100 lump sum;
- A further reduction in green diesel excise levy.
These are in addition to the €2 billion worth of cost of living measures announced as part of Budget 2022 or brought in since.
Gas & Electricity
The Government agreed to reduce the rate of VAT on the supply of gas and electricity from 13.5% to 9% for a temporary period from 1 May until 31 October, at a cost of €46 million.
Households will make estimated savings of around €50 on gas supplies and €70 on electricity supplies on annualised basis. This will more than offset the increase in carbon tax to take effect from 1 May.
Petrol & diesel
Last month, excise duty was reduced by 20 cents a litre on petrol and 15 cents a litre on diesel, at a total cost of €310 million. Excise duty on marked gas oil (green diesel) was reduced by 2 cents per litre at a cost of €10 million.
These measures mitigate the cost of a fill of a 60 litre tank by €12 for petrol and €9 for diesel. They benefit all transport users including commuters, businesses and farmers.
These current excise reductions on petrol, diesel and marked gas oil (green diesel), which were due to finish at the end of August, will now be extended until Budget Day in October at an additional cost of €80 million.
Green diesel
There will be a further reduction in the excise levied on marked gas oil (green diesel) of 2.7 cent per litre.
Fuel Allowance
The 370,000 households most affected by the rising cost of energy who are eligible for the Fuel Allowance will receive an extra lump sum payment of €100 in May, this targeted measure will assist those very vulnerable to fuel poverty and will cost €37 million.
It means that households claiming the Fuel Allowance will receive a total of €1,139 this year, compared to €735 last year, as a result of Budget 2022, and the two lump sum payments announced this year.
National Energy Security Framework
The Government also agreed to implement the National Energy Security Framework, which provides an overarching and comprehensive response to Ireland’s energy security needs in the context of the war in Ukraine. This will be published today by the Minister for Climate, Environment and Communications.
The Framework sets out how the Government can:
- support and protect households and businesses, with a particular focus on protecting those most at risk of fuel poverty;
- ensuring Ireland’s energy security in the short-term, to protect the society and economy;
- accelerating the move to our own renewables – for long-term energy independence;
- how consumers and businesses can be supported now to save energy and save money.
Minister for Finance Paschal Donohoe said:
“The Government is acutely aware of the impact that rising prices are having on citizens and businesses right across the country. That is why we have responded with a series of measures over recent months at a cost of close to €2billion.
“Today, the Government has agreed to reductions in the rate of VAT from 13.5% to 9% on the supply of gas and electricity for a temporary period from 1 May until 31 October costing an estimated €46million. This will result in savings of €50 on an annual gas bill and €70 on an annual electricity bill.
“This measure is being introduced to offset the increase in carbon tax which will take effect from 1 May.
“A further reduction in excise duty on Marked Gas Oil by 2.7cent and an extension to the period at which the reduced excise on petrol, diesel and marked gas oil applies to Budget Day will benefit all households, businesses and our farming sector.”
Minister for the Environment, Climate, Communications and Transport Ryan said:
“The National Energy Security Framework is a comprehensive response to the emerging and developing impacts on our energy system caused by the war in Ukraine. It sets out how Ireland is prepared to deal with potential shocks to our energy system. The war in Ukraine also underpins how important it is that we switch at speed and at scale to our own indigenous renewable energy sources.”
ENDS