Denis Naughten (Roscommon-South Leitrim, Fine Gael)
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Question 241: To ask the Minister for Finance his plans to have Annex III of the EU VAT Directive amended to include road safety products and thereby reduce the rate of VAT applicable on such products; and if he will make a statement on the matter. [35915/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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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 only apply the reduced VAT rate to those goods and services which are listed under Annex III of the VAT Directive. While Annex III provides for the reduced rate of VAT to be applied to children's car seats, it does not provide for the reduced rate to be applied to road safety products in general, which are subject to the standard VAT rate of 21%.

Regarding children's car safety seats, in Budget 2007 Ireland availed of the option under Annex III to apply the reduced rate of 13.5% to these products with effect from 1 July 2007.

In relation to amending Annex III, the Deputy will be aware that this could only be done in the context of an overall review at Community level of reduced rates. In July 2008 the EU Commission published a proposal to amend the current Annex III, to expand the general possibility for Member States to apply reduced VAT rates on an optional basis to certain locally supplied services, including labour-intensive services, housing and restaurant services. The Commission proposal does not, however, propose to include road safety equipment in general in Annex III.