Martin Mansergh (Tipperary South, Fianna Fail)

For the information of Senator Alex White, the Seanad was represented when the Value-Added Tax Consolidation Bill 2010 was considered by the Joint Committee on Consolidation Bills. As a consolidation Bill, special procedures applied and it was dealt with by an ad hoc committee.

I appreciate the opportunity to say a few words about the Value-Added Tax Consolidation Bill 2010, which has now been passed. The Bill consolidates the law relating to VAT, as contained in the Value-Added Tax Act 1972. This continues the successful ongoing process of consolidating and modernising the tax code. If follows the Taxes Consolidation Act 1997, which consolidated direct taxes legislation dealing with income tax, corporation tax and capital gains tax; the Stamp Duties Consolidation Act 1999; and the Capital Acquisitions Tax Consolidation Act 2003. The Government intends to modernise and consolidate the law relating to customs over the coming year.

VAT is governed by EU law. It was introduced in Ireland in preparation for joining the EEC. It took effect from 1 November 1972. The number and level of VAT rates applying in Ireland varied substantially throughout the 1970s and 1980s. Changes were also made to the range of goods and services to which those rates applied. Arising from agreement at EU level, the current system of two main VAT rates, along with the zero rate, came into effect in 1993. Since then, major VAT changes have generally related to administration, countering fraud and implementing EU provisions. In Ireland, as in other EU member states, VAT is a major source of Exchequer revenue. In Ireland, VAT accounts for approximately one third of the overall yield to the Exchequer, or some €10 billion.

The preparatory process for consolidating VAT was as rigorous as that adopted for earlier tax consolidations. At all times, we aimed to ensure the most accurate consolidation of the existing law, with nothing left out and nothing added. That has been achieved in this Bill, which has been duly certified as a consolidation of existing VAT law by the Attorney General. Changes to VAT law at domestic level may only be made within the confines of EU VAT law, as set out in the 2006 EU VAT directive. In this context, the provisions of the VAT consolidation Bill have been remodelled as far as possible on the VAT directive to facilitate better alignment and thereby easier reference.

The use of archaic language has been eliminated in the Bill. The most notable effect of this remodelling exercise is that the number of sections in the Bill is now much greater. During the passage of a consolidation Bill, the only amendments which can be made are those intended to remove ambiguities and inconsistencies, substitute obsolete or inconvenient language or achieve uniformity of expression. Substantive changes to existing law are not permitted under the consolidation process. A small number of such amendments were made on Committee Stage.

The Bill before the House is the culmination of considerable work. The greatest benefit of this consolidation will be the restructuring of the VAT code in a clearer, more coherent and logical manner. The code will become more accessible and user-friendly for all users, including Members of the Oireachtas, businesses, tax practitioners and students of taxation, who have to cope with annual changes to VAT legislation. The Revenue Commissioners will publish guidance notes on the Bill when it is enacted. I appreciate the assistance of the House in the speedy passage of the Bill and the contribution of some Senators to the consideration of the Bill by the standing joint committee.

It is important that the Bill is enacted before the start of December, because any VAT changes made by regulation, in the budget or in the next finance Bill would invalidate the status of the Bill as a consolidation Bill. That would necessitate a recommencement of the process and delay its implementation unnecessarily. I express my appreciation and that of the Minister for Finance and the Government of the amount of work that went into the preparation of the Bill. The staff of the Revenue Commissioners and the Office of the Parliamentary Counsel are to be congratulated on a job well done. I thank the officials in the Department of Finance. I also thank Senators for their consideration of the Bill.