Seymour Crawford (Cavan-Monaghan, Fine Gael)
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Question 136: To ask the Minister for Finance if his attention has been drawn to the fact that significant supplies of plastic film used for the wrapping of baled silage are being sold from Northern Ireland with no VAT being charged on this product; if his further attention has been drawn to the fact that legitimate farm suppliers have to charge a levy towards the recycling of the used plastic yet those who buy from the unauthorised sales persons have their used plastic collected without a problem; the amount of tax and levies that have been lost in this process over the past two years; and if he will make a statement on the matter. [21551/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I am advised by the Revenue Commissioners that the VAT rules for the sale of goods (including silage wrap) from one Member State to another are as follows. Sales between a VAT registered business in Northern Ireland and another VAT registered business (including a farmer) in this State are zero rated in Northern Ireland and the purchaser must self-account to Revenue in this State for VAT on the transaction at 21%. Sales between a VAT registered business in Northern Ireland and a consumer in the State are subject to VAT (at the UK standard VAT rate of 17.5%) in Northern Ireland if the consumer in this State is not registered for VAT. It is therefore legitimate for farmers to purchase their goods under either of these circumstances in Northern Ireland, subject to the VAT registration thresholds and subject to compliance by them with the self-accounting rules if they are VAT registered.

The Deputy has not provided sufficient information to enable Revenue to establish if a breach of VAT legislation has occurred. From enquiries to date, Revenue is not aware of VAT problems concerning silage wrap being sold from Northern Ireland. If the Deputy has more specific information he might provide that information to Revenue so that the matter can be investigated.

With regard to the levy on plastic, I am informed by the Department of the Environment, Heritage and Local Government that under the Waste Management (Farm Plastics) Regulations 2001, a wide range of obligations are imposed on both producers (i.e. manufacturers and importers) and suppliers of farm plastics (i.e. silage bale wrap and sheeting) requiring them to collect and recover such plastics at end-of-life. As an alternative to operators self-complying in this regard, both producers and suppliers of farm plastics may contribute to, and participate in, compliance schemes established for the recovery of farm plastics waste.

The Irish Farm Films Producers Group (IFFPG) – which comprises membership of film manufacturers, importers and suppliers - is a not-for-profit organisation and is at present the sole approved body in Ireland for the purposes of operating a compliance scheme for the recovery of farm plastics. Under the terms of its approval, the IFFPG is required to meet specified targets equating to the recovery of 60% of all farm plastics placed on the market in 2009 and in each year thereafter. Almost 12,500 tonnes of farm plastics were collected by the IFFPG in 2008 for the purpose of recycling, representing a national recovery rate of over 74% of farm plastics placed on the Irish market in that year.

The scheme funds its activities by means of the imposition on producer members of an Environmental Protection Contribution (EPC) levy of €127 per tonne of farm plastics placed on the Irish market. These levies are included in the sale price of the product and are passed through each step in the trading chain, down ultimately to the individual farmer. The EPC levies collected are transferred by producers to the IFFPG for the purpose of funding authorised collection agents on a nationwide basis to collect waste silage / bale wrap, before transporting it to recycling facilities both at home and abroad for reprocessing. This is an essential function which ensures that this product is, as far as possible, disposed of in a manner which is not harmful to the environment.

In addition, the levy income is supplemented by a differential weight-based collection fee applied on the collection of farm plastics from both individual farmyards and designated collection points of which there were approximately 140 operating nationally in 2009. A farmer who cannot demonstrate that he has sourced farm plastic from a legitimate source must pay a higher collection fee. Neither the levy nor the collection fees are prescribed in the regulations, they are set by the Board of the IFFPG at a level that ensures their operating costs are met having regard to the producer responsibility obligations on their members.