Budget 2012 Energy Brief (Ireland)



Budget 2012 – Energy Highlights

This guide aims to give readers a useful summary of some of the changes in the Irish Budget 2012 which will affect their energy costs and some other energy related areas.

Summary

There were few surprises on the energy front in Irish Budget 2012.  The “new reliables” of Carbon Tax combined with a range of increases to the “old reliables”, including motoring charges, were the most significant changes but there were a few silver linings announced.  There is one certainty, the changes announced will affect everybody and there has been some criticism that the measures place a heavier burden on the poor than the rich in Ireland.

Value Added Tax (VAT) Changes

The standard rate of VAT rises by 2% to 23% from beginning of 2012.  While not affecting the majority of energy products and supplies, it will increase petrol and diesel prices when applied. 

If the price of diesel and petrol stays at €1.48 per litre the VAT increase on 1st January 2012 will add roughly 2.4 cent per litre, bringing the price up to around €1.50 per litre.  It will also affect the prices of cars and other energy consuming devices.  It will not affect home heating oil as this has a reduced VAT rate of 13.5%. 

There is a reduction in the VAT rate on district heating from 21% to 13.5%. This brings district heating into line with the majority of heating supplies. The VAT refund order has been amended for farm construction to provide that farmers may claim a refund on wind turbines purchased from the 1st January 2012.

Carbon Tax

Carbon Tax on fossil fuels has risen from the equivalent of €15 per tonne to €20 per tonne.  The increase was applied to petrol (additional 1.4 cent per litre) and auto-diesel (additional 1.6 cent per litre) from 7th December 2012 and the increases on other relevant fuels will take effect in May 2012 after the current heating season has ended.  This will result in the following increases.

Fuel
Price Increase
Units
Kerosene
€14.40
per 1000 litres
Marked Gas Oil
€15.58
per 1000 litres
LPG
€9.33
per 1000 litres
Fuel Oil
€17.52
per 1000 litres
Natural Gas
€14.46
for 13,750 kwh (annual avg household consumption)

The Carbon Tax will not apply to solid fuels, so there will be no increase for peat or coal.

Motor Tax

The Motor Tax rates for all categories of vehicles will increase from 1st January 2012.  For private vehicles where the tax is based on CO2 emissions, there will be an increase in the annual charge from between €28 - €158 per year.   

 

CO2 Band
Current
2012
Price Change
% Change
A
€104
€160
€56
54%
B
€156
€225
€69
44%
C
€302
€330
€28
9%
D
€447
€481
€34
8%
E
€630
€677
€47
7%
F
€1,050
€1,129
€79
8%
G
€2,100
€2,258
€158
8%

For vehicles on the older system of motor tax the increases will be around 7.5%.

Engine Size
Current
2012
Price Change
% Change
not over 1,000
€172
€185
€13
7.6%
1,001 to 1,100
€259
€278
€19
7.3%
1,101 to 1,200
€296
€307
€11
3.7%
1,201 to 1,300
€310
€333
€23
7.4%
1,301 to 1,400
€333
€358
€25
7.5%
1,401 to 1,500
€357
€384
€27
7.6%
1,501 to 1,600
€445
€478
€33
7.4%
1,601 to 1,700
€471
€506
€35
7.4%
1,701 to 1,800
€551
€592
€41
7.4%
1,801 to 1,900
€582
€626
€44
7.6%
1,901 to 2,000
€614
€660
€46
7.5%
2,001 to 2,100
€784
€843
€59
7.5%
2,101 to 2,200
€823
€885
€62
7.5%
2,201 to 2,300
€860
€925
€65
7.6%
2,301 to 2,400
€895
€962
€67
7.5%
2,401 to 2,500
€935
€1,005
€70
7.5%
2,501 to 2,600
€1,120
€1,204
€84
7.5%
2,601 to 2,700
€1,164
€1,251
€87
7.5%
2,701 to 2,800
€1,204
€1,294
€90
7.5%
2,801 to 2,900
€1,248
€1,342
€94
7.5%
2,901 to 3,000
€1,293
€1,390
€97
7.5%
3,001 or more
€1,566
€1,683
€117
7.5%
Electrical
€146
€157
€11
7.5%

It was also announced that a substantial overhaul of the current emissions based regime for motor tax and Vehicle Registration Tax (VRT) will be made, in consultation with the motor trade, in time for implementation in 2013.

Tax Relief for Investment in Renewable Energy Projects

The tax relief provided to companies for investments in certain renewable energy projects has been extended to 31st December 2014. This is a welcome extension and its aim is to increase the volume of electricity produced in Ireland from these sources, including solar, wind, hydro (ocean, wave and tidal) and biomass.


This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, TrinitySSI does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

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