Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

The 9% VAT rate was a pump-priming exercise and like all pump-priming exercises, one primes the pump, the engine fires and when the engine is going, one does not need to prime the pump again. We must measure whether the industry can now go without special measures and, like any other sector, pay the VAT rate which applies to it.

On the issue of cost, part of the jobs initiative was that we would abolish the travel tax, provided the airline companies did a deal to bring extra tourists into Ireland. We could not negotiate this and as a consequence, the travel tax receipts have been retained within the system. That accounts for a significant portion of the discrepancy. It is true that the pension levy figure is above the estimate, on the basis of the returns published yesterday. That is because the capital value of pension funds in 2012 rose by 11% or 12%. The Deputy will be aware that the equity market internationally has moved which means that there is now a bigger base. We would recover our money by putting up the VAT rate to something less than 13.5%. The cost was €350 million, but because of the expansion of activity in the sector, we could recover the money by not quite going to 13.5%.

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