Joan Burton (Dublin West, Labour)

I thank Senators for their contributions. On Senator Mooney's comments in respect of the reductions being passed on to customers, I have heard some of the debate and will be extremely disappointed if, for instance, in the tourism, hotel, hospitality, bar and restaurant sector, the reductions are not passed on to consumers. On the objective of reducing VAT, VAT is a tax charged on the final purchaser, that is, in a restaurant it is charged on the customer and it is passed over by the restaurant to the State. The aim of the reduction in VAT is to provide a stimulus to businesses, particularly in the tourism sector. When one takes the PRSI reduction together with the VAT reduction, it should provide a modest, but significant, stimulus to those industries.

The problems in the tourism sector are partly because we have lost customers, particularly from the United Kingdom, partly to do with the differential between the euro and sterling. We are perceived as being a very expensive destination. Similarly, Ireland is perceived as being quite expensive by many coming from the United States. Reducing prices, even if the price reductions are relatively modest, ought to give people in those trades more custom. That is the objective of the exercise. I heard the chief executive of the hotels federation suggest strongly that it would be passed on and that this would be the federation's recommendation to its members. That was wise advice. The message that must go out is that Irish hotel tourism products are good value for money and that people can come to Ireland, have a good experience at a reasonable cost and enjoy a holiday, either for themselves or for their families.

There was a measure similar to this in France several years ago where the VAT rate was reduced. It was on foot of a long-running wrangle with the European Commission to allow VAT rates in terms of labour content to be lowered and, after long years of dispute, the French won the point. In even small restaurants in France, because I happened to be in France at the time, there were notices stating that a cup of coffee was being reduced by a small amount - it could have been merely 15 cent - but at least the customer saw that an action by the French Government to lower the VAT was being carried through in however modest a way, was reflected on the menu board and was outside on the board on the pavement.

In response to Senator Healy Eames, I indicated that I am not in a position to accept the amendment because the Bill will be signed by the President tomorrow. We want to start the national internship scheme, the reduction in PRSI and the reduction in VAT on 1 July. Given that we have been on a tight timescale, I do not propose to accept the amendments. In any event, the amendment was not moved.

The issue in respect of calculating and coming back with a report on the number of jobs created was raised and this is something I am keen to do. Let us remember there are two elements to this, as we remarked last week. We wish to retain jobs and create extra jobs. As Members are aware, throughout the country businesses are hanging on by their fingernails. I hope small reductions, such as this, will give them the extra space necessary to bring the business successfully through the remarkably tough times the economy is in now.

The way to calculate an increase in jobs poses a technical difficulty but if there is a general stimulus we will see it in terms of a general impact on the economy. I would be pleased to come back to the House in this regard. On the other hand, if businesses and employers do not pass on some of what the Government is doing by way of stimulus the measure is time-limited. There is a sunset clause of December 2013 on the PRSI measure. If it proves to have no impact, the Minister for Finance and I will have no difficulty in coming to an agreement that if the measure is irrelevant from the point of achieving its objectives, then the industries involved will create their own arguments to allow the measure to wither at the end of 2013.

All of the parts of the jobs initiative make up a stimulus package and we must start somewhere. We will watch very closely to see the impact and the response of industry. As people are aware, the foreign-traded goods and services sector is doing well at the moment. There is an amount of job creation under way which is satisfying and there have been good outcomes from organisations such as IDA Ireland and Enterprise Ireland in terms of interest by multinational companies. Such companies as Google emphasise again and again how pleased they are with their experience of working and investing in Ireland. The difficulty is with our domestic economy and we must stimulate the domestic economy.

The measures in this legislation form one element of a patchwork of measures. With the Taoiseach, I will launch the VAT and PRSI reductions and a series of other measures, including the national internship scheme, in the morning. Senator Bradford emphasised the need to give value to customers and to use the measures in the way intended by Government. We will monitor the situation closely to ensure this is what businesses do.