Denis Naughten (Longford-Roscommon, Fine Gael)
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Question 327: To ask the Minister for Finance his views on reducing the VAT rate on road safety products; and if he will make a statement on the matter. [9550/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The Deputy will be aware from previous replies to the similar questions that 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 VAT Directive Member States may retain the zero rates on goods and services, which have been in place since 1 January 1991, but cannot extend the zero rate to other goods and services. It is therefore not possible under EU law to apply a zero VAT rate to the provision of road safety products.

In addition, Member States may only apply the reduced VAT rate to those goods and services which are listed under Annex III of the VAT Directive. While Annex III does specifically list the supply of children's car seats, it does not include other road safety products. The reduced rate cannot therefore be applied to such goods. Therefore the only VAT rate that can apply to the supply of road safety equipment, under EU law, is the standard VAT rate which in Ireland is 21%.

However, as I announced in the Budget, the VAT rate applicable to children's car seats will be changed from the standard VAT rate to the reduced VAT rate of 13.5% with effect from the 1st July 2007.