The Government has announced a new cost of living package that will see households save around €50 on an annual gas bill and €70 on an annual electricity bill.
The temporary cut in VAT on fuel bills from 13.5% to 9% will begin on May 1 and last until October 31.
Finance Minister Paschal Donohoe said the VAT cut will cost the State around €46 million.
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He also announced an additional once-off lump sum €100 fuel payment allowance which will also be paid in May for over 370,000 households who avail of the support.
Opposition TDs have said the Government failed to sufficiently target its cost of living measures to low and middle-income households.
The Government has moved to bring forward more financial support as energy prices continue to soar and to offset the increase in the carbon tax which is set to go ahead next month.
The carbon tax increase will add €16.85 to an annual gas bill, and €21.56 to a fill of home heating oil.
Minister Donohoe also said the cuts to excise duty on petrol and diesel will last until Budget 2023.
And the Public Service Obligation (PSO) Levy has also been scrapped, which adds just under €60 to an annual bill. as part of Government measures aimed at addressing inflation.
Minister Donohoe defended the Government’s decision not to reduce VAT on home heating oil.
He said: “So if I was to make a change in relation to home heating oil, everything else that is charged the 13.5% would have to come down as well, including, for example, commercial services.
“I don’t believe that would be a good use of the country’s money, it certainly would not be targeted.”
Ministers also agreed to further reduce the excise tax on marked gas oil by 2.7%, to further offset cost increases on farmers from May 1.
Consumers with heavy electricity dependence, such as medical equipment, are to be given rooftop solar panels on a €20 million scheme which is expected to benefit around 3,000 homes across the country.
Reacting to the latest cost of living package, Social Democrat TD Jennifer Whitmore said the Government has done nothing to reduce the skyrocketing cost of home heating oil – which has increased by 127% in the past year and is the predominant method of home heating for elderly people and those in rural areas.
She added: “It is also now clear that the VAT reduction for gas and electricity, finally announced by the government this week, could have been introduced months ago if the government had bothered to request the change from the EU. Up until March, the government had insisted that a change to the VAT rate was not possible.”
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