Joe McHugh (Donegal North East, Fine Gael)
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Question 138: To ask the Tánaiste and Minister for Enterprise, Trade and Employment the initiatives she has undertaken since her appointment to support Border businesses in this State who are at a competitive disadvantage because of the weakness of sterling, and because of the relatively low VAT rate there. [43436/08]

John Deasy (Waterford, Fine Gael)
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Question 142: To ask the Tánaiste and Minister for Enterprise, Trade and Employment if her attention has been drawn to the fact that following the announcement in the United Kingdom pre budget report that the rate of value added tax in the UK will be reduced to 15%, the Irish rate will be 6.5% greater than in the UK and that this, combined with the fall in the value of sterling, is causing trading problems to retail outlets and other small businesses; the measures she plans to alleviate these adverse effects; and if she will make a statement on the matter. [43825/08]

Mary Coughlan (Donegal South West, Fianna Fail)
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I propose to take Questions Nos. 138 and 142 together.

Any comparison of the respective VAT rates between the UK and Ireland must take account of the fact that the fiscal positions of both countries are very different. In this regard it should be borne in mind that Ireland already has a low tax economy by comparison with other competing economies, especially in the area of direct taxation on both business and labour, which has a direct impact on all companies and workers in the State. This lower starting position for taxation makes it more difficult to reduce taxes further.

I am aware that some businesses in the retail sector have taken initiatives to respond to the sterling differential and the effect of the VAT rate in the North. My Department does not have programmes or policies to specifically support the retail sector. However, my development agencies are providing specialised assistance to firms to help them develop products and services that are better able to withstand purely cost-based competitive pressures. Total Enterprise Ireland approvals to the end of November across the Border region were €9.86m to 122 companies and payments up to the end of November totalled €8.66m to 152 companies.

Enterprise Ireland has more than 730 client companies, employing more than 21,400 people across the Border region. Enterprise Ireland Border regional offices are involved in various support activities aimed at developing capabilities and encouraging companies that are currently only trading locally to expand their markets abroad.

The County Enterprise Boards (CEBs) play an extremely important role in the development of indigenous enterprise in the Border region and it is my intention that an appropriate level of financial support for all CEBs will continue to be made available. The local base of the CEBs who are responsible for the delivery of the micro-enterprise measure in the Border regions means that the projects supported are tailored to the particular needs of that regional economic environment. In relation to non-financial support the CEBs engage in a range of activities to stimulate enterprise and to support small businesses such as mentoring and training programmes.