Simon Harris (Wicklow, Fine Gael) | Oireachtas source

I thank Senator O'Brien. This is trickier than it seems at first because of the factors the Senator has outlined with respect to EU law. Nicotine replacement patches are subject to the 23% standard rate of VAT, while other nicotine products such as nicotine inhalers, tablets and chewing gum are categorised as oral medicines and thereby qualify for the zero rate of VAT. Nicotine replacement patches cannot be considered an oral medicine and as such do not qualify for the zero rate of VAT.

When considering the VAT system and the VAT treatment of any product or service, the VAT rating of goods and services is governed by the requirements of the EU VAT directive, with which Irish VAT law must comply. The application of the zero rate of VAT to medicines is a historical derogation from the normal VAT system, and the zero rate can apply only in restrictive circumstances. Under EU rules, Ireland can continue to apply the zero rate of VAT to certain items to which it was applied on 1 January 1991 for clearly defined social reasons and for the benefit of the final consumer. Oral medicines, including nicotine tablets and chewing gum, meet these criteria and continue to be liable at the zero rate. Nicotine replacement patches have not been liable at the zero rate from 1991, and so cannot now be made liable at the zero rate. Therefore, I cannot accept the recommendation.