Taoiseach called on to help struggling transport sector

Rising fuel costs and inflation are having an impact.

The Taoiseach has been called on to allow bus operators to apply for a VAT rebate on fuel.

Local Fianna Fáil TD Brendan Smith was speaking in the Dáil when he highlighted the difference in systems on either side of the border.

He said operators here are unable to claim back the VAT paid on fuel to run their buses, with their counterparts in Northern Ireland able to get refunds.

“Coach operators are unable to register for VAT, which would allow them to claim back VAT on fuel, tyres and other running costs.”

He continued, saying EU rules mean such registration is not allowed but said the Taoiseach should advocate for flexibility at European level given the increased cost of fuel and inflation in prices.

Deputy Smith highlighted the case of a “small scale” company in Cavan, which he said operates services across the border.

“[It was] established in 2012 and the same fares are being charged today as they were back in 2012. That’s not viable in the long run. The coach operators need some assistance in that regard, particularly costs to try and reduce them. They cannot pass on any more costs to the consumer.”

Responding, Taoiseach Micheál Martin said VAT registration is governed by EU law and only specified categories of businesses or groups are exempt.

He said the transport of passengers and their luggage is exempt from VAT, meaning the tax is not applied to tickets. However, he admitted VAT must be paid on fuel, tyres and other supplies.

“Ireland has retained the VAT exemption on the transport of passengers and their accompanying baggage. This means the supplier does not register for VAT and does not charge VAT on the supply of their services. There is no VAT exemption on costs where they are used in the transport of passengers.”

He said while a reduced rate could be introduced for the sector, it would mean replacing it with VAT on passenger charges.

“A reduced rate of VAT could be introduced for passenger transport… While this would give them deductibility on the in relation to VAT on their business inputs, it would involve charging passengers VAT on their fares.”