Dan Neville (Limerick West, Fine Gael)
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Question 134: To ask the Minister for Finance his plans to increase the higher rate of VAT; and if he will make a statement on the matter. [1315/11]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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No change in the 21% standard rate of VAT was announced in the 2011 Budget. However, as part of the National Recovery Plan, it is proposed that the standard rate of VAT will increase by 1 percentage point to 22% from 1 January 2013, with a further increase on 1 January 2014 to 23%. The combined yield from these measures is expected to be €620m in a full year and should increase inflation by 0.72%.

The VAT changes are being introduced in the second half of the period covered by the Plan. It was decided that the initial years of the Plan should focus of fiscal measures in the areas of income tax, pensions and tax expenditures. For example, some 65% of the total income tax adjustments outlined in the Plan are being made in 2011. In addition the VAT take in Ireland is already relatively high by international standards.