Thursday, 22 March 2012
Finance Bill 2012 (Certified Money Bill): Committee and Remaining Stages
Darragh O'Brien (Fianna Fail)
The memorandum of understanding agreed a phased increase of VAT to 23% over a two-year period rather than 2% up front. I ask the Minister to review the cut he made to VAT not only for the hospitality sector but also other industries. The Minister for Transport, Tourism and Sport, Deputy Varadkar, who is wont to make off-the-cuff remarks in this regard, questioned whether the reduced rate would be retained. I ask the Minister, Deputy Noonan, to consider the effect of the reduction on, for example, newspapers given that prices increased to their former levels. I have criticised the jobs initiative for the absence of a mechanism to track the impact of VAT reductions on job retention or creation. It is claimed that 6,000 jobs have been created but I would like to see evidence for that on an other occasion. We oppose the section because the VAT increase brought forward in the budget is not the one agreed in the original memorandum of understanding.
Are comparative figures available on the VAT take for January and February 2012 compared with the same period last year? The Minister gave an interesting answer in respect of the 6% reduction in petrol usage, which is a significant figure. That may indeed be due to the weather but the increases in excise duty and VAT appear to be having a negative effect in that people are holding onto their money rather than spending it. Last summer the Government exhorted us to go out and buy the devil and all. We want people to spend in the local economy but delaying the 2% increase in VAT would have been preferable because it would have allowed us another year to find out whether growth will return to the economy.