Kevin Humphreys (Dublin South East, Labour)
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Question 102: To ask the Minister for Finance his plans to end the VAT subsidisation loophole in below cost selling of alcohol when the retailer chooses to sell the product below cost as a loss leader to drive footfall; and if he will make a statement on the matter. [28253/11]

Kevin Humphreys (Dublin South East, Labour)
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Question 105: To ask the Minister for Finance if he has considered and estimated the amount of VAT that may be lost to the State due to below cost selling of alcohol; if not, if he will consider asking for the amount to be calculated; if he will support a ban on below cost selling of alcohol to stop this VAT subsidisation loophole; and if he will make a statement on the matter. [28258/11]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 102 and 105 together.

VAT is a tax on the value added to a supply and the collection and recovery of VAT takes place at each stage of the chain of supply from manufacturing to retailer. Under EU and domestic VAT rules traders who are registered for VAT collect VAT on the goods and services that they sell. In turn such traders are entitled to recover the VAT they incur on their business inputs used in the purchase or production of goods or delivery of services. Consequently, if there is a decrease in value at any stage in the process the trader is entitled to a refund of the excess of VAT incurred over that collected.

As regards calculating the VAT impact of below cost sales, separate figures are not available for input VAT on goods that were subsequently sold at a discount because traders' VAT returns show only the total input VAT and the total output VAT for the period covered by the return. I would point out however, that the refund of VAT is part of the operation of the VAT system.