An Independent TD has said plans to cut the VAT rate on solar panels are “better late than never” and should be extended to other renewable energy projects.
The VAT rate on the supply and installation of solar panels in private homes is set to be reduced from 23% to zero from May 1.
Minister for Finance Michael McGrath and Minister for the Environment, Climate and Communications, Eamon Ryan confirmed that the Cabinet has agreed to the change which will involve an amendment to the Finance Bill 2023.
The Department of the Environment, Climate and Communications (DECC) said the measure would reduce the average cost of the supply and installation of solar panels for consumers by around €1,000.
The Department of Finance has estimated that the move will cost €19 million annually.
VAT
Deputy Michael Collins said that there is now “a clear logical imperative to adopt a similar approach with respect to other renewable energy products, specifically insulation material for domestic homes”.
The Cork South-West TD said that homeowners and suppliers have repeatedly said that the significant costs associated with insulation, retrofitting and renewable energy is the primary barrier preventing people from carrying out such work.
“Any move that will effectively reduce the enormous cost burdens created by energy are of course to be welcomed.
“There are many people out there however, including within the industry, who are deeply frustrated as to why such moves were not considered last year when I and others were calling for them.
“Do we really have to reach crisis mode in all areas of government policy before common sense proposals like these VAT cuts are accepted?” Deputy Collins asked.
Solar scheme
The TD also sounded a note of caution about the solar capital investment scheme (SCIS) for farmers under the new Targeted Agricultural Modernisation Scheme (TAMS 3).
“I would have concerns about the effective roll-out of this scheme given how liable departmental schemes are to excessive levels of complexity.
“Minister Ryan and his ministerial colleagues must ensure that farmers and householders can actually benefit from these VAT cuts and investment schemes.
“It’s no good making a song and dance about them if people cannot see an immediate return or if the system becomes dysfunctional or mired in delays like we saw with the Micro-Generation Support Scheme, which saw huge difficulties emerge around tariffs and payments to householders and those who invested thousands in installation costs,” Collins said.