Public Service Obligation Levy increase

hellboy99

Just read that the Public Service Obligation Levy will increase to €7.15 from October 1st. When VAT is added, customers will actually pay €8.11, what I've always found baffling about this levy is how VAT can be charged on it?

http://www.bonkers.ie/blog/higher-electricity-bills-on-way-as-pso-levy-increase-announced/

Electric Ireland: David

Hi hellboy99,

hellboy99 wrote:

what I've always found baffling about this levy is how VAT can be charged on it?

Because VAT is a government imposed charge that is calculated on the total amount of the bill, and the PSO Levy makes up part of the overall bill, VAT will in turn be charged on it. 
 
There is also some relevant info on the CER’s website:
 

Applying VAT on electricity charges is outside the remit of the Commission. This tax is applied by the Revenue Commissioners in accordance with section 10 Part 1 of the 1972 V.A.T Act (as amended). For further information, you can call the VAT Interpretation Branch on +353 (0)1 6475000 or visit www.revenue.ie.

 
Hope this helps. If you have any further questions don't hesitate to ask.

Thanks,
David

hellboy99

Electric Ireland: David wrote: »

Hi hellboy99,



Because VAT is a government imposed charge that is calculated on the total amount of the bill, and the PSO Levy makes up part of the overall bill, VAT will in turn be charged on it. 
 
There is also some relevant info on the CER’s website:
 


 
Hope this helps. If you have any further questions don't hesitate to ask.

Thanks,
David

But is the PSO Levy not a form of tax? How is charging VAT on a Tax fair?

Electric Ireland: David

Hi hellboy99,

The words Tax and Levy are often used interchangeably. Specifically, the PSO Levy relates to the recovery of any additional costs associated with meeting the obligation to purchase electricity generated from sustainable, renewable and indigenous sources. This levy is imposed by the Government on all electricity customers irrespective of their supplier.

The CER, who are responsible for calculating the levy, have more information on their website here.

Thanks,
David

.BrianJM

Have to side with 'HellBoy99' on this whilst also accepting that the networks can't do much about it.
ESB is obliged (ordered) by government to buy power from more expensive sources, e.g. peat.
{{The costs recovered through the Levy equate to the additional costs of these purchases over and above the cost of electricity purchased at a market price.}}
So it's just another tax, with a different name.
If memory serves, VAT was originally a tax on services and/or goods supplied.
Seems now as though it's a tax on tax!!!