Households will save only €10 a month from VAT cuts on utility bills

Households will save less than €10 a month under extended VAT cuts announced by the Government, according to figures released to Sinn Féin.

In the cost-of-living package announced last month, the Government decided to extend lower rates of VAT applied to electricity and gas bills to the end of October 2023.

Figures released to Sinn Féin’s finance spokesman Pearse Doherty show that a tentative analysis undertaken by the Revenue Commissioners using third-party data estimates that the overall cost of the measure as it applies to households will be in the region of €70 million for electricity and €16 million for gas.

“The benefit per household is estimated to be in the region of €38 for electricity and €26 for gas,” Minister for Finance Michael McGrath told Mr Doherty in response to a written parliamentary question.

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The Donegal TD criticised the Government’s measures as insufficient in the face of rising utility bills landing at the moment. “The Government has refused to provide households with any meaningful support with their energy bills for the next several months. This is despite bills remaining sky high,” he said.

Mr Doherty said the extension of the reduced VAT rate would save households “a meagre €4.75 on their electricity bills each month and only €3.25 per month on their gas bills”. He criticised the Government for its plans to proceed with an increase in the carbon tax in May.

“What is €5 a month worth to a pensioner that faces an electricity bill of €1,000?” Mr Doherty asked. “Governments across Europe, including Germany and the Netherlands, have reduced and capped energy prices to protect households. Instead, this Government is allowing Irish households to bear the brunt of sky-high energy costs with little support.”

[ Diners ‘will have to pay more’ if 9% VAT rate scrapped, restaurant owners warn ]

A spokesman for the Department of Finance said the Government was “keenly aware that energy is a big driver of costs across the economy and that price rises are impacting on almost all householders and businesses” and that the Coalition announced a €1.2 billion package in February “to help families, businesses, pensioners, carers and people with disabilities”.

Budget 2023 had brought forward €600 for every household in energy credits spread across three instalments, the last of which is falling due now, the spokesman said.

The response to Mr Doherty was based on third-party data as Revenue told Mr McGrath that traders are not required to identify the VAT yield generated from the supply of specific services or supplies to particular customer groups.

“Therefore, Revenue does not have data from tax returns on which to base an accurate estimate of the net benefit per household arising from the reduced VAT rate of 9 per cent applied to electricity and gas between March 2023 and the end of October 2023.”