Richard Bruton (Dublin North Central, Fine Gael)
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Question 131: To ask the Minister for Finance if, in view of the new flexibility introduced by the European Union regarding the application of VAT in member states, he will consider proposals from the national newspapers of Ireland to reduce the 13.5% VAT rate to a lower rate; and if he will make a statement on the matter. [41131/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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VAT law is governed by the EU VAT Directive to which Irish VAT law must comply. Under the VAT Directive it is possible for Member States to operate up to two reduced rates, as low as 5% to all the goods and services that are listed in Annex III of the Directive. Newspapers are listed in Annex III and are subject to the reduced rate of 13.5% in Ireland.

With regard to further reducing the 13.5% reduced rate of VAT, you will appreciate that it is the usual practice for the Minister for Finance not to speculate or comment in advance of the Budget what it will contain and I do not propose to deviate from that practice.

However, it should be noted that reducing the reduced VAT rate by 1 percentage point would cost the Exchequer around €250 million in a full year.