Ms Cora O'Brien:

I will discuss first the 9% VAT rate as I listened to the debate on the issue. There are two aspects to the debate, namely, the 9% rate and the idea of having regionalised VAT rates. It is interesting to note that between nine and 12 items are currently covered by the 9% rate. Hotel rooms have been the subject of much discussion.

They are not the only thing that are subject to VAT at 9%. Up until now the tendency has been towards an all or nothing debate, so it would be interesting to look at some of the other areas at 9% because they could be different. We do not measure their economic sensitivity. We can, however, say that this is what one can or cannot do in this area. One could change one part of the list and not change another. There are hotels, for example, tour guides, meals, cinemas, open farms and green fields; there is a lot in there and one could have a debate over some of the other issues. We do not have to change 9% back to 13.5%; we could go for something in between. This is something that the committee might find worth exploring but we have no evidence and we have done no economic analysis on it.

I will now address the issue of regional VAT. While I fully understand the difficulty between Dublin and outside of Dublin for the sectors involved, the problem is that one cannot apply regional VAT because of the European system we have. Although one could take certain items in and out of the list, one cannot apply lower VAT in one part of the country and not in another. That is because of the rules within which we have to operate.