Eamon Gilmore (Dún Laoghaire, Labour)

I move:

(1)THAT the rate of value-added tax on the supply of certain goods and services at present chargeable at the rate of 21 per cent be increased to 23 per cent of the amount on which tax is chargeable in relation to the supply of such goods and services, and that, accordingly, the Value-Added Tax Consolidation Act 2010 (No. 31 of 2010) be amended in subsection (1)(a) of section 46 by substituting "23 per cent" for "21 per cent".

(2)THAT this Resolution shall have effect as on and from 1 January 2012.

(3)IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act 1927 (No. 7 of 1927).

This resolution provides for an increase in the standard rate of VAT from 21% to 23%, with effect from 1 January 2012. The change will apply to all goods and services which are currently subject to the VAT rate of 21%, for example, cars, petrol and auto-diesel, electrical equipment and CD/DVDs, alcohol, cigarettes and tobacco, telecommunications, furniture, cosmetics and adult clothing and footwear. Approximately 51% of all goods and services are subject to the standard VAT rate.

The increase in the VAT rate is estimated to raise €67 million in a full year. It will have a 0.67% impact on the consumer price index if the increase is passed on in full to the consumer. This VAT increase will have no impact on the goods and services subject to the other VAT rates in the Irish VAT structure. In this regard, there will be no change to the zero rate of VAT, which applies to a range of goods and services, including most food, children's clothes and footwear and oral medicines. There will also be no change to the 13.5% VAT rate which applies to new houses, electricity, gas and home heating fuels, or to the 9% VAT rate which applies until 31 December 2013 to restaurant and catering services, hotel and holiday accommodation, certain entertainment services, sporting facilities, certain printed matter and hairdressing.

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