Seán Sherlock (Cork East, Labour)
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Question 24: To ask the Tánaiste and Minister for Finance his views on reducing the rate of VAT charged on non-oral contraceptives to the minimum 5% rate in line with the EU VAT directive; and if he will make a statement on the matter. [7733/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The Deputy will be aware that the Finance Bill introduces an amendment to the VAT Act 1972 that will reduce the VAT rate applicable to non oral contraceptive products from 21% to 13.5%. This is a significant reduction in itself which will take effect from the passing of the Finance Bill. It is hoped that this measure will address concerns raised by the various health bodies.

In relation to the scope for further reduction of the VAT rate applicable to such products, the position is that the scope for reducing or removing the VAT rate applicable to any good or service is determined under EU VAT law, with which Irish law must comply. Under EU VAT law, it is not possible to introduce new zero rates of VAT, as we can only retain the zero rating that was in existence on 1 January 1991. As non oral contraceptive products were not subject to the zero rate on 1 January 1991 it would not be possible to apply the zero rate of VAT to condoms.

As the Deputy suggests Member States may have up to two reduced VAT rates of not less than 5 per cent for a specified number of goods or services which are set out in Annex III of the EU VAT Directive. Contraceptive products are included in Annex III. Ireland in common with the vast majority of EU Member States operates a single reduced rate.

Even though EU law does provide for the introduction of a second lower reduced rate of 5%, such a move would have major structural implications for the VAT system and I do not propose to radically change our VAT system structure for this purpose.

Those calling for reduced consumption taxes, should be aware of the numerous determinants of price that explain the price variances across the EU. The level of VAT in practice only plays a small part in determining the price of such products in each Member State. Notwithstanding the above it is hoped that the VAT reduction introduced in the Finance Bill will lead to lower prices, and I hope that the retailer groups which were part of the campaign for the reduced prices will both reduce prices in line with the VAT reduction and look at their own pricing structures.

David Stanton (Cork East, Fine Gael)
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Question 25: To ask the Tánaiste and Minister for Finance if he has considered or will consider allowing tax relief to businesses that have experienced losses due to works carried out by local authorities or the National Roads Authority; and if he will make a statement on the matter. [7752/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The premise on which this question is based appears to be that businesses should receive specific compensation through the tax system for the loss of business which they consider they have experienced or will experience as a result of works carried out by local authorities and others. I do not consider the tax system to be the appropriate mechanism through which to deal with matters of this kind.

In the normal way, the tax system already provides relief to companies and businesses, generally, in relation to losses suffered by them in the course of their trade. Trading losses can be set off against profits in the same accounting period. Such losses can also be set off against profits of the preceding accounting period, if the company or business carried on the trade in that period. Finally, trading losses can be set off against future profits of the same trade, unless the losses have been otherwise utilised.

Dan Neville (Limerick West, Fine Gael)
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Question 26: To ask the Tánaiste and Minister for Finance if he foresees any threats to the Irish corporation tax regime; and his plans to mitigate the possible effects. [7820/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I want to assure the Deputy that the Government's position on our corporate tax regime is unambiguous. It is clearly stated in the Programme for Government that the 12 1⁄2% rate of corporation tax will remain.

That commitment is protected, in an EU context, by the principle of unanimity in taxation matters. The draft Reform Treaty confirms that position.

Although the Deputy does not specify what threats to the Irish corporate tax regime he has in mind, he may be referring to the Commission's technical work on a common consolidated corporate tax base (CCCTB) which has been the subject of much recent discussion.

It is important to note there has been no political decision taken on the CCCTB at the level of the Council of Ministers. The Commission is carrying out technical work on various aspects of a CCCTB but has not yet made a formal proposal.

As there has not been a formal proposal, it is very difficult to assess the impact of a CCCTB on Ireland and the EU overall. The Irish position on the CCCTB is well known and I will continue to highlight the difficulties I believe such a proposal could cause for individual Member States and overall EU competitiveness. There is, I believe, increasing scepticism among Member States as the Commission's technical work continues.