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

As I did not have the chance to deal with it on Committee Stage I will deal with the latter point raised by Deputy Tóibín before I deal with Deputy Doherty's amendment.

The VAT rating for goods and services is subject to EU VAT law that our law must comply with. In general, the VAT directive provides that all goods and services are liable to VAT at the standard rate, currently 23% in Ireland, unless they fall within categories of goods and services specified in the directive in respect of which member states may apply a lower rate or exemption from VAT. The rate of VAT on fuel and materials consumed by bus companies for the running of buses cannot therefore be reduced. The directive does allow Ireland to continue to apply a historic VAT exemption to the transport of passengers and their accompanying baggage. This means the transport undertaking does not register for VAT, does not charge VAT on the supply of its services and has no VAT recovery entitlement on costs where such costs are used for the exempt supply of passenger transport. Ireland may continue the VAT exemption on the supply of domestic passenger transport as governed by Article 371 of the VAT directive. However, it cannot change the conditions under which the exemption was granted. In accordance with the directive, a reduced rate of VAT could be introduced to the supply of passenger transport in place of the exemption that currently applies. This would give the transport operator deductibility in relation to VAT on its business inputs but would involve charging passengers VAT on their fares. Under the directive, it is not possible to apply the zero rate in Ireland to these services as they were not zero-rated in the past.

I am aware the UK continues to apply the zero rate of VAT to the supply of passenger transport, with the exception of a taxi service that is standard-rated. Suppliers established in the UK have an entitlement to deductibility on the costs relating to the supply of these services where the place of supply is the UK. However, this is also an historic standstill provision and cannot be availed of by Ireland.

The Deputy's amendment would therefore have been in breach of the EU VAT directive. That is the reason the particular issue he raised cannot be met. I would be happy to give him a further note on the matter if it would be of help to those who raised it with him.

I did shake my head while Deputy Doherty was speaking. The reference that caused me to do so was the one to my stay and spend initiative. When I heard him say I "butchered it", I just thought there he goes again, because it was a good idea. It did not work.

The reason it did not work, however, was that health restrictions were changed a few weeks later to not allow travel throughout the country. That was one of the reasons it did not work. I said "There you go again, Deputy" because he just cannot see the positive in anything. What about all the measures we brought in that made an impact, or the ones that worked, such as the 9% VAT rate, EWSS and the changes made to tax liabilities? We brought those measures in and they worked. I fully accept the save and spend scheme did not work in the way I hoped, but that was not because I butchered some brilliant Sinn Féin idea. It did not work because of changes in the health restrictions that came after it was introduced. I accept the execution of the scheme might have been a little complicated, but I did not butcher anything that came from Sinn Féin.

I can think of few issues on which Sinn Féin has lower credibility than the cost of living, which was raised by the Deputy. I say that because it is opposed to any changes to personal taxation. The Deputy has repeatedly said that.

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