Brendan Howlin (Wexford, Labour) | Oireachtas source

This is an issue that Deputy Nash and I raised on Second Stage in some detail and that has been comprehensively argued by Deputy Naughten. I thank the Minister for listening. It is not related to his Department directly, but he has taken on board the trenchant and clear arguments made by Deputies across the House that this need not, and ought not, be done. I argued on Second Stage that if there was a concern about the loss of revenue from British visitors to the Irish jurisdiction being able to claim VAT refunds on purchases in Ireland, it would be more than adequately dealt with in Part 3. Although it has been referenced by Deputy Naughten, I wish to underscore how this is an extraordinarily high hurdle to jump for any UK national to get a VAT refund. That is a simple fact. A traveller whose place of habitual residence is in the UK must provide proof that the goods have been imported into the UK on behalf of the visitor to Ireland and that VAT, duties, customs and excise chargeable under UK law have been paid on the importation of those goods. When leaving the country, the normal VAT refund that would accrue to someone via VAT refund companies would not be applicable to UK travellers. They would have to go home, pay the duty in full and then go through the process of applying for an Irish tax rebate. The bulk of people will not do that. It is an extremely high hurdle and a robust safeguard to prevent any erosion of revenue that might arise from any potential mass influx of tourists to Ireland availing of duty free goods.

The figures have been put on the record. Approximately 20% of the purchases in question are made by UK nationals. My concern relates to the proposition in respect of all foreign nationals to increase the threshold from VAT refunds from €0 to €175. The proposed figure in amendment No. 10 is now €75. While a significant improvement, it still only amounts to 50% of all purchases that have availed of the refund to date. These are not massive purchases. The people in question are going to craft shops and stores selling Irish knitwear. These purchases sustain those shops. Mention has been made of crystal. Waterford Crystal and all crystal products would fall into this category. These are purchases that people make to bring home souvenirs, and 50% of them are under the €75 threshold. The amendment will devastate that market.

My party has been supportive of all Brexit initiatives taken by the Administration. The Tánaiste has gone on record more than once voicing appreciation for the united and co-ordinated approach taken by all parties in the Dáil on this issue. We have not been divisive. We have not sought party political gain. We have not sought to score points. We have stood shoulder to shoulder to make the best of a very bad lot and to make as many mitigations as we can to the undoubted negative impact that Brexit will bring upon us. However, this proposal in the Bill, in particular the middle part of section 64, which reads, "the supply of a traveller’s qualifying goods, where the total value of that supply of goods, including tax, is more than €175," has nothing to do with Brexit.

It affects American, Canadian and Japanese visitors and, it is to be hoped, the growing number of Chinese visitors who will come when we get back to some semblance of normality with travel. They should not be affected one way the other by the fact that the UK is no longer part of the EU, yet they will be affected because clearly somebody in Revenue decided that this was not a good idea.

If the Government wants to amend tax law, it should do so in the finance Bill and argue its case in the finance committee. It should not be buried or sought to be included in a Brexit-related Bill when it has no implications for Brexit. As I said, the issues in terms of protecting revenue are more than adequately addressed in Part 3. Deputy Nash and I have sought a review of it for the very reason articulated by Deputy Naughten, which will no doubt be articulated by others.

Amendment Nos. 9 to 11, inclusive, are being taken together. Amendment No. 11 asks that no later than 12 months after the coming into operation of section 64 the Minister shall review the operation of the amendment effected by the section and lay before each House a report on his or her conclusions. The idea of that is to deal with the very point being made.

Others in the EU see an opportunity in these arrangements and are looking to see how they can capture the UK spend. In a previous debate, I mentioned what happened in Portugal, which is actively setting up new tax-free facilities to capture British spend. Mention has been made of the changes being introduced in Spain and France. We are actively going in the other direction, but so be it. Due to our proximity, perhaps there is a case for that, but that is more than adequately covered in the third part of this section. Let us review it in a year's time so we can determine whether it is needed or whether we need to mirror what is happening in other European countries.

I have heard no argument whatsoever for the increase in the threshold for VAT from €0 to €75. It is an entirely arbitrary figure. The figure was €175 last week and now it is proposed that it be €75. Why not make it €50? All of this has a real and damaging impact on small retailers who are already on their knees. We have been desperately anxious in this House to find mechanisms to assist those retailers in getting back to business. They have been closed down. We do not want to add another millstone around their necks while they are in the middle of trying to recover from the pandemic and are also impacted by the costs associated with Brexit.

I implore Government to address this. Retailers across the country have been in touch with us. The amendment I and others have tabled proposes to delete the increase in the VAT threshold from €0 to €75. It has no part in a Brexit Bill because it is not Brexit-related. Something which affects Japanese, American and Canadian tourists is not Brexit-related. It is simply an overreach by Revenue to try to claw back money that it does not feel should be there in the first place. If it wants to argue that, let it do so in a budgetary statement and through a finance Bill, not in a omnibus Bill that we are facilitating in a special way without pre-legislative scrutiny and which is being fast-tracked through the Houses.

The vast bulk of what is in the Bill is needed. In the spirit that we have approached all of this, I ask the Government to work in harmony in regard to the need to prepare our economy and people for the inevitable harm that Brexit will do and mitigate that to the best of our ability. We do not want, in the middle of all of that, to include a clause that will hammer one very vulnerable sector of our economy, namely, small retail groups and those involved in VAT refunds. Why would we do that when we are desperately anxious to examine what supports we can give to the sector?

As I said, the Minister for Foreign Affairs gave a very ready listening ear on Second Stage. I hope whoever responds to this, whether it is the Minister of State at the Department of Public Expenditure and Reform or the Minister for Foreign Affairs, will ensure that the Government takes another step back so we can be united on every section of the legislation. Let us ensure that the common approach to Brexit that has characterised the past number of years is maintained and we not do something that I am absolutely certain would be harmful to a sector of our economy that is already reeling from enough blows. I appeal to the Minister to accept the amendment tabled by me, Deputy Nash and a number of other Deputies and not press his amendment.

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