Bill payers to save an extra €13.50 in energy credit scheme after cost of VAT included

The cost of value-added tax (VAT) will be included in the Government’s new energy credit scheme, meaning bill payers will save €113.50 when the scheme is introduced later this year.

It was initially envisaged the credit off electricity bills would amount to €100 for every bill payer, but this did not include VAT. However, in a memo going to Cabinet today, ministers are told VAT will now be included in the scheme, bringing an extra saving of €13.50, and a total saving to €113.50.

Meanwhile, the Residential Tenancies Board (RTB) will be tasked with settling any dispute involving tenants who believe landlords, who pay electricity bills, are not passing on the saving to them.

Energy Minister Eamon Ryan is bringing the memo to Cabinet, outlining the legislative path for the scheme which is aimed at easing the financial burden caused by the international energy crisis for homeowners and renters.

Mr Ryan has asked the Oireachtas Energy Committee to bypass pre-legislative scrutiny to allow the laws underpinning the scheme pass through to Dáil as soon as possible. The committee is to be given a technical briefing on the energy credit.

The Electricity Costs Domestic Electricity Accounts Emergency Measures Bill is due to go before the Dáil and Seanad in early February and it is expected to be passed within a week. It is hoped once the legislation is passed, bill payers will receive the deduction by the middle of March.

The credit will be paid directly to energy suppliers and customers will not have to apply for it.

Mr Ryan’s department is still working on a mechanism to give the tax credit to people who have pre-paid electricity meters and an announcement on how this will work is expected shortly.

The Government will urge landlords to pass on the saving to their tenants if they are paying the electricity bills on behalf of renters and including the cost in their monthly rent.

This issue has been examined by officials and it was established that there are hundreds rather than thousands of tenants for whom this problem could potentially arise.

The Residential Tenancies Board will be asked to settle any disputes between landlords and tenants to ensure renters do not lose out from the benefit of the new scheme.

“The last thing a landlord will want is to be dragged before the RTB so hopefully this will ensure they pass on the credit,” a Government source said.

The Government hopes it will get a boost in public support on the back of the scheme, which comes at the same time as Covid-19 restrictions being lifted.

However, record increases in electricity and gas costs, along with the sky-rocketing rate of inflation, are causing huge financial difficulties for people. Electricity prices rose by 22pc on average last year, with gas up 28pc, and home-heating oil up 52pc, according to the latest Central Statistics Office consumer price index.

The Labour Party is to bring a motion to the Dáil this week which proposes a €200 carbon credit for people earning under €50,000.