Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

If I leave things as they are, the rate for products that are currently zero-rated will increase to 23% on 1 January next. As a matter of principle, I do not believe I should allow the courts to determine what the correct policy is. I could concede that principle in this case, but I do not know what the outcome of the legal hearing will be and I do not know how long the legal process will take. This matter was on the agenda last year. I deferred it to allow for further consideration. If I decide to leave things as they are, many products that are currently zero-rated will move to 23%. Deputy McGrath asked about the options that were open to me. The only options open to me were to go to 23% or to 13.5%. I have examined the value and scale of this issue. In recognition of all the issues that were generated last year, I have had considerable engagement on this matter with Revenue and within the Department. This has been necessary to gain a full understanding of why this situation has developed and of the options that are open to me. The process we put in place in the aftermath of last year's Finance Bill was quite exceptional. It gave me space to understand further the issues that are at stake here and the reasons for the differing views that exist in this regard. Having done all of that work, the only options that were open to me involved the rate to which these products should move. I accept fully the advice of Revenue, which has been crystal clear with me, with regard to the significant issues that are now at play within this sector. The question of ensuring there is a level playing field is considerable. Some producers are applying the law as it should be applied and others are not. I am making this change for those reasons. I remind Deputies that this time last year, the expectation of the entire sector was that the products to which a non-zero rate would be applied would move to 23%. That is not happening now because I am moving them to a lower VAT rate.