Brendan Howlin (Wexford, Labour)
Link to this: Individually | In context

Question 38: To ask the Tánaiste and Minister for Finance his proposals for a review of VAT classifications with a view to reducing the rate of VAT applied to certain environmental goods and services in regard to the commitment contained in the Programme for Government; and if he will make a statement on the matter. [7739/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

The Programme for Government contains a commitment to examine the scope for reducing the VAT rate on environmental goods and services from the standard VAT rate of 21 per cent to the reduced rate of 13.5 per cent. I should mention that this is just one of a number of initiatives in the Programme aimed at delivering a cleaner environment.

When considering a change in the VAT treatment of a good or service, it is important to bear in mind that the scope for such change is derived from EU law with which Irish VAT law must comply. In this regard, the rate of VAT that applies to a particular good or service is determined by the nature of the good or service, and not by the environmental impact of the good or service. There is no provision in European VAT law that would allow the application of a reduced VAT rate on supplies of goods or services based on their environmental impact per se.

As I announced in the Budget, the VAT rate on the supply of Mischantus rhizomes, seeds bulbs and similar inputs used for the agricultural production of biofuels is being reduced from 21% to 13.5% with effect from 1 March 2008. This measure will assist in the development of agricultural production of such fuels.