Séamus Brennan (Dublin South, Fianna Fail)

I am aware that VRT relief on cars used in the short-term car hire industry was introduced in the Finance Act 1992 and amended subsequently in 1993, 1994 and 1998. The measure is aimed at boosting supply of hired cars to facilitate the development of the tourism industry.

I am advised by my colleague, the Tánaiste and Minister for Finance, that the measure has been abused by some in the car hire and leasing industries as a tax avoidance measure to support a range of business models that have nothing to do with the tourism industry. Accordingly, the Finance Bill 2008 introduces an amendment to tighten up the application of the existing policy and to restrict such abuse, while still facilitating the availability of vehicles for the tourism industry generally.

I understand that, in the course of debate on Committee Stage in the Dáil on the Finance Bill, the Tánaiste indicated the Revenue Commissioners could defer implementation of the amendment as an administrative arrangement until September 2008. This would allow the sector some time to regularise its current position in order that it be fully compliant with the requirements of the legislation for the 2009 season. The concession will not apply in the case of abuses of the VRT refund scheme or the application of the current VAT rules.

I understand the Tánaiste also offered to consult with the car hire trade to determine whether its concerns warrant changes to meet the objective of the short-term car hire scheme in respect of the tourism sector, while excluding the possibility of abuse and if so, what changes would be required. I have asked my Department, having regard to any significant tourism impacts that may be identified, to monitor and, if appropriate, assist in any consultations engaged in by the Department of Finance.

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