Brendan Griffin (Kerry South, Fine Gael)
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Question 80: To ask the Minister for Finance his views on a matter (details supplied) regarding the universal social charge; if he will clarify the position regarding the examples given; and if he will make a statement on the matter. [40281/11]

Michael Noonan (Limerick City, Fine Gael)
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The position is that the Universal Social Charge (USC) does not apply to social welfare payments or payments of a similar nature made by any other state or territory. However, I should point out that occupational pensions are liable to the USC, if the payment is greater than the exemption limit, which from 1 January 2012 is €10,036 per annum. In this particular case the retired couple in question receives a higher proportion of their total income from occupational pension than the retired couple in the newspaper article and therefore pays more USC. In both cases the State Pensions are exempt from the USC.

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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Question 81: To ask the Minister for Finance the annual cost to the Exchequer of the VAT reductions announced earlier in the summer; if there was any monitoring to check that the VAT reductions were passed on; if such monitoring is still ongoing; if any action has been taken or is proposed against firms that reduced their charges for a few weeks following the VAT reduction and have since put their charges back up again; if the matter can be reported on; and if he will make a statement on the matter. [40284/11]

Michael Noonan (Limerick City, Fine Gael)
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The Finance (No. 2) Act 2011 provided for a second reduced VAT rate, of 9%, on a temporary basis in respect of certain tourism-related services and goods for the period 1 July 2011 to end 2013. This measure was estimated to cost €120 million in 2011, €350 million in 2012 and in 2013, and €60 million in 2014. Businesses must account for VAT at the 9% rate on these specified goods and services provided by them on or after 1 July 2011. Where the goods and services are supplied to another VAT-registered business a VAT invoice must be issued, charging VAT at the new rate. However, where the supplies are to unregistered customers there is no obligation to show the VAT separately.

Businesses dealing with unregistered customers are not legally obliged to reduce their (VAT-inclusive) pricing to reflect the lower VAT rate, but would be expected to do so. However, in reducing the VAT burden on activities related to the tourism industry, the introduction of the 9% VAT rate is aimed at contributing towards boosting tourism and the creation of additional jobs in that sector. With this in mind, the VAT reduction will be kept under review and evaluated before end 2012 in order to determine its effectiveness in aiding the industry. If it is shown that the VAT reduction has little or no effect in aiding the industry then the measure is open to being reformed or abolished. In addition, checks on the correct operation of VAT, including the rates of VAT applied are integral parts of Revenue's audit and compliance programmes.