Fergus O'Dowd (Louth, Fine Gael)
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Question 56: To ask the Tánaiste and Minister for Enterprise, Trade and Employment the action she will take, in view of the significant price and VAT difference in Border areas and the consequent loss of business and employment in Border counties as a result, to address this situation; and if she will make a statement on the matter. [44525/08]

Mary Coughlan (Donegal South West, Fianna Fail)
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As I said last week in response to a similar PQ, 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.

As we are all aware, we are running a significant budget deficit for this year. Suggestions by some commentators that Ireland should replicate UK fiscal policy by reducing our standard VAT rate by 2.5 percentage points would cost in excess of €1.1 billion in a full year. Reducing the standard rate to the same level as that in the UK (15%) would cost almost €3 billion per annum. In this regard, it is important to bear in mind that any policy to reduce VAT in the hope that it will boost spending has to be assessed with caution as much of its benefit would likely flow out of the State given the openness of our economy.

My Department does not have programmes or policies to specifically support the retail sector. In response to ongoing concerns in relation to the level of price differences north and south of the border, I have arranged to meet with Retail Ireland to seek explanations on the differences.

However my development Agencies are actively supporting firms in the border region. To further strengthen Irish businesses and employment in border region, Enterprise Ireland will continue to drive improvements in innovation, competitiveness, productivity and management capability in Irish companies. There are currently 2 full time enterprise development programmes ongoing in the border region. This involves business incubation and training for 25 entrepreneurs. Enterprise Ireland has also run 4 Enterprise Start Programmes in the region during 2008. This is a part time support programme to facilitate people who wish to develop and grow an early stage business idea.

To assist companies with innovation and R&D, the Institutes of Technology in the border region have been approved €2,485,773 in 2008 for a total of 18 specific projects. Furthermore, up to August 2008, there were a total of 112 innovation vouchers approved to SMEs in the border region.

With regard to smaller enterprises, the County Enterprise Boards are working to stimulate economic activity and to promote an enterprise culture at local level. In 2007 Cavan, Donegal, Leitrim, Louth and Monaghan CEBs paid over €1.5m in grant aid to 111 clients and assisted in the creation of 243 net jobs in these counties. In 2007 2,525 people participated in training through the border CEBs.