Seán Sherlock (Cork East, Labour)
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Question 62: To ask the Minister for Finance if VAT on Government services applied in December 2009 is obligatory on local authority refuse collections; and if he will make a statement on the matter. [9793/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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In its ruling of 16 July 2009 in Case C-554/07, the European Court of Justice found that Ireland had failed to correctly transpose EU VAT law regarding public bodies including local authorities. In order to comply with the ruling, it is necessary to make public bodies subject to VAT and Finance Bill 2010 includes a provision to this end.

In effect, this means that certain goods and services provided by local authorities will now become subject to VAT especially where competition arises with private sector providers who have to apply VAT. Services that will become liable to VAT include refuse collection, landfill and recycling services; off-street parking; toll roads; rent from certain lettings of commercial property; and the supply of staff and data. It should be noted that such services are already subject to VAT if provided by a private operator. The standard or the reduced VAT rates will apply as appropriate. Refuse collection will be subject to the reduced VAT rate of 13.5%. It is proposed to introduce these changes from 1 July 2010.

However, other services operated by public authorities are not being made subject to VAT by the Finance Bill provision, as they are otherwise exempted. In that context, for example, the supply of water, education, health and passenger transport services are not being made subject to VAT as they are otherwise exempted from VAT. Examples of the types of activities by public bodies where a charge applies which will remain outside the scope of VAT, include parking fines, fees for passports, driving licenses etc, development levies, casual trading licenses and certificates of compliance. These are purely regulatory functions.