Energy crisis: NI Protocol could limit VAT relief to tackle fuel costs, says TUV leader

Speaking as petrol, diesel, gas and home heating oil prices continue to spike, the North Antrim MLA urged the UK government to take “urgent” action as the energy costs add to the cost-of-living crisis facing many families.

He said a cap should be placed on fuel taxes.

But the TUV leader has said the Northern Ireland Protocol arrangements mean any such action would be limited in Northern Ireland.

Similar concerns were raised by the DUP MP Paul Girvan, who said the Protocol is impacting the government’s ability to help in the cost of living crisis as he called on party leaders to agree to the DUP request to deliver some help to hard-pressed families.

Mr Allister, in a statement, said: “The crippling and astronomical rise in fuel prices demands urgent government action. The burden on families and our economy is becoming unbearable.”

He suggested tax relief as an option to lower costs, saying: “Whereas the excise duty on fuel is fixed, irrespective of the pump price, the higher the price goes the more VAT (Value Added Tax) the government collects, because it is 20% on the end price.

“While VAT on some energy commodities, home fuel oil and electric, is capped at 5%, the same could and should be done on fuel prices. In that way Her Majesty’s Government (HMG) could have an immediate and positive impact on runaway fuel prices.”

On the impact of the Protocol on any such action, Mr Allister warned: “In Northern Ireland we have the added restriction of the Protocol keeping us under the EU’s VAT regime (Art 8), and, thereby there is a prohibition on reducing vat below the EU’s minimum diktat of 5%.

“Hence, the absurdity that if the Chancellor decided to remove vat from fuel and electricity, we could not benefit because it is the EU’s writ, not HMG’s writ that rules our vat. Yet another reason why the iniquitous Protocol must go.”

Earlier this week, a senior figure from the Northern Ireland Consumer Council suggested further subsidies could be paid by the Northern Ireland Executive.

Peter McClenaghan, director of infrastructure and sustainability at the consumer council, told the News Letter: “I think, after the election, the Executive could be looking at ways to subsidise people’s bills.”