Willie O'Dea (Limerick East, Fianna Fail)

While I appreciate the health concerns that form the basis of this recommendation, it should be understood that in matters relating to the VAT rating of goods and services, the Tánaiste and Minister for Finance and the Government are constrained by the requirements of EU VAT law — with which Irish VAT law must comply. In this regard, the rate of VAT that applies to a particular good or service depends on its nature, and not on the status of the consumer. Accordingly, there is no provision in EU VAT law that permits the removal or reduction of VAT based on the social or economic status of the consumer.

As regards the VAT rate that applies to defibrillators, under the VAT directive, member states must maintain the zero rates on goods and services which were in place on 1 January 1991, but cannot extend the zero rate to new goods or services. The zero rate cannot, therefore, be applied to defibrillators, which are subject to the standard rate. In addition, member states may only apply the reduced VAT rate to those goods and services which are listed under annex 3 of the VAT directive. While annex 3 includes the supply of medical equipment for the exclusive personal use of a disabled person, it does not include defibrillators for general use. The reduced rate therefore cannot be applied to the supply of defibrillators. Exemptions from VAT are also governed by EU law and under the VAT directive we are not permitted to exempt the supply of defibrillators.

Senator Twomey makes the point that if somebody, such as a doctor, pays VAT on a defibrillator for use in his or her business, he or she can claim that as an input against the VAT bill. On the other hand, charities, community organisations etc. are exempt from VAT and therefore have no way of claiming back the VAT they pay on a defibrillator. It is open to any member state to provide a grant equivalent to the amount of VAT paid — and for repayment to made in that way. That is an option. Other countries are not doing it, however. It has been done once here as regards the Band Aid concert, when CDs were sold. As VAT on those CDs was 21%, the State agreed, as a once-off initiative, to repay a grant roughly equivalent to the amount of VAT paid. I believe the British Government did something similar. It is an option. Having said that, the Government is already investing a great deal of money, both directly and indirectly, in charitable organisations — as regards allowing the offset of tax for donations to charities. Charities are well looked after, too, under the stamp duty regime, as are community associations. I could go through all the various outlays, but I know Senators are aware, generally, what is being done for charities and community organisations.

With regard to the specific suggestion of providing a grant for people who cannot claim relief against their VAT, I certainly bring to the notice of the Minister for Finance what has been said by Senators Harris, Kelly and Twomey.