Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I move amendment No 98:

In page 89, between lines 26 and 27, to insert the following:“Value-Added Tax in respect of charities

45. The Minister shall, within 3 months of the passing of this Act, prepare and lay before Dáil Éireann a report on the introduction in 2017 of a capped Value-Added Tax compensation scheme for charities with reimbursement to commence in 2018.”.

This issue has been discussed in detail. The Minister established a working group on taxation and charities, which produced a very good report. Now is the time to signal that the Government is prepared to move on it. The issue relates to the VAT liability of the charitable sector. The most recent data, set out in the report of the working group under the Department of Finance, is that in 2010, total expenditure by Irish charities was approximately €1.7 billion and total VAT incurred was €77.4 million, or 4.5% of total expenditure. It is heartbreaking for many volunteers who spend their time fund-raising for charities that much of the money raised, especially for capital projects, returns to the Exchequer by way of VAT payments.

A number of models are in use elsewhere in Europe. The Danish model is probably one of the best. It caps the amount of VAT that can be repaid to charities under a VAT compensation scheme. The cap in Denmark is approximately €20 million. Nobody is suggesting it would start at that level in Ireland. The ground work has been done. The report is very good. We need a policy objective from the Government to introduce a VAT compensation scheme. The fundamental objective is that the money charities raise through fund-raising is spent for the purpose for which it is raised and does not end up in the arms of the Exchequer by way of a VAT liability. I hope the Minister signals that he is prepared to move on it.

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