Finance Minister Paschal Donohoe defends the decision not to reduce VAT on heating oil

The finance minister defended the decision not to cut VAT on heating oil as part of the government’s package of measures to tackle the cost of living crisis.

Aschal Donohoe said that while the government can help offset rising costs, it cannot provide all the measures that are asked of it.

The government unveiled its latest package of measures on Wednesday in a bid to ease financial pressures on families and households.

The VAT rate for gas and electricity will fall to 9% from May 1 to the end of October, at an estimated cost of 46 million euros.

The government has said the latest measures will offset the increase in carbon taxes, which is expected to take place early next month.

Ministers also agreed to reduce the excise tax on branded diesel by 2.7% from May 1.

Mr Donohoe claimed the government could not reduce VAT on heating oil due to EU laws.

‘The reason for this is that we have laws across the European Union that govern the ways in which you can change VAT and the number of different VAT rates each country can have,’ Mr Donohoe told RTÉ.

“While I accept that this seems a little removed from the cost of living challenges, overall it is very much in the interest of the small exporting country like Ireland, within the Union European Union, that we have clear VAT laws, because in turn it helps us to sell our goods and services in other countries.

“Although we face great challenges with war now, after a pandemic, we do so with an economy that is still able to grow and still able to keep record numbers of people working, because we have the choices of last two years I think it’s overall ok.

“That’s why we’re going to help you step by step, but at the same time recognize that we can’t do everything that many want me to do.

“The price increase is done at the checkout, at the store, the impact on your wallet, your wallet is really considerable.

“It is the case during this year, and perhaps beyond, that we will not be able to fully insulate our people, our economy from the effects of the war in Ukraine and what it means in done for the price of energy. .”

Mr Donohoe also said a decision on whether to ban the sale and distribution of turf will take place after Easter.

It comes as Tánaiste Leo Varadkar told the Fine Gael parliamentary party on Wednesday that the proposed ban on the commercial sale of turf was on hold.

But hours earlier, Tourism Minister Eamon Ryan said there were no plans to lift the ban, saying it would protect the public from air pollution.

Mr Donohoe said that with a three-party government there can be “different views and different interpretations”.

He added: “What is the case is that no proposal on this has yet reached the government.

“I understand that this will only happen after Easter and after Easter the government will look into this.

“We absolutely appreciate, within Fine Gael, the imperative to make our air cleaner, it is also the case that it is a matter of concern for many within my party for economic reasons and also acknowledging the importance of grass from a cultural perspective, and what it can mean for many families and businesses.

“We are going to engage in government on this issue and work our way through this.”