Róisín Shortall (Dublin North West, Labour)
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Question 300: To ask the Minister for Finance his views on the suggestion from child seat retailers (details supplied) that a reduction in VAT would allow parents from poorer backgrounds to purchase new seats instead of buying them second hand; and if he will make a statement on the matter. [29063/05]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The position is that the VAT rating of goods and services is subject to the requirements of EU VAT law with which Irish VAT law must comply. Under the sixth VAT directive, member states may retain the zero rates on goods and services which were in place on 1 January 1991, but cannot extend the zero rate to new goods and services. As children's car seats were not subject to the zero rate on 1 January 1991 it is not possible to apply the zero rate to the supply of such products. However, member states are permitted to apply a reduced rate to those goods and services, which are set out in annex H of the EU sixth VAT directive. Children's car seats are listed under category 4 in annex H. It would therefore be possible to apply a reduced rate of VAT to children's car seats. Ireland operates a single reduced rate of 13.5%.

In relation to the benefit of a VAT reduction being passed on to the consumer which is normally the main reason given for VAT reductions or refunds, experience shows that there is no guarantee that moving products to the reduced rate would necessarily be reflected in the retail price of products. In addition, a reduction along the lines suggested would only bring about a reduction of approximately €6 for every €100 spent on a child car seat. Therefore such a reduction, even if passed on, would not necessarily bring about an increase in the sales of new car seats.

Finally, it is not customary for me to comment on any possible changes to the VAT rate applied to such products which may, or may not, arise in the context of the forthcoming budget.