Written answers

Tuesday, 24 September 2013

Department of Finance

VAT Rates Application

Photo of Maureen O'SullivanMaureen O'Sullivan (Dublin Central, Independent)
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207. To ask the Minister for Finance the social policy objectives of this Government and of the State on the needs of those who are mobility-impaired and on low incomes, that are advanced by imposing a VAT rate of 23% on walking sticks while the VAT on limousine hire stands at 0%; if this indicates a need for a re-balancing of VAT rates generally in order to achieve co-ordination with social policy objectives; and if he will make a statement on the matter. [39680/13]

Photo of Maureen O'SullivanMaureen O'Sullivan (Dublin Central, Independent)
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208. To ask the Minister for Finance the social policy objectives of this Government and of the State, especially in the context of population health gain, that are advanced by levying 23% VAT on toothbrushes and toothpaste while the VAT on processed sugar stands at 0%; if this indicates a need for a re-balancing of VAT rates generally, in order to achieve co-ordination with social policy objectives; and if he will make a statement on the matter. [39681/13]

Photo of Maureen O'SullivanMaureen O'Sullivan (Dublin Central, Independent)
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209. To ask the Minister for Finance the social policy objectives of this Government and of the State, especially in the context of meeting the health needs of those who are ill, that are advanced by levying 23% VAT on catheters, a basic necessity in the circumstances, while VAT on caviar, a luxury food item stands at 0%; if this circumstance indicates a need for a re-balancing of VAT rates generally, in order to achieve co-ordination with social policy objectives; and if he will make a statement on the matter. [39682/13]

Photo of Maureen O'SullivanMaureen O'Sullivan (Dublin Central, Independent)
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210. To ask the Minister for Finance the social policy objectives of this Government and of the State, in the context of in-shore fisheries development, that are advanced by levying VAT at 23% on lobster pots, which are essential working implements, while the VAT on processed lobster, a luxury food item, stands at 0%; if this indicates a need for a re-balancing of VAT rates generally, in order to achieve co-ordination with social policy objectives; and if he will make a statement on the matter. [39683/13]

Photo of Maureen O'SullivanMaureen O'Sullivan (Dublin Central, Independent)
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211. To ask the Minister for Finance the social policy objectives of this Government and of the State, in the context of sustainable home heating, that are advanced by imposing a VAT rate of 23% on solar panels while a 13% levy is imposed on bituminous coal, a contributor to climate change; if this indicates a need for a rebalancing of VAT rates generally, in order to achieve co-ordination with social policy objectives; and if he will make a statement on the matter. [39684/13]

Photo of Maureen O'SullivanMaureen O'Sullivan (Dublin Central, Independent)
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212. To ask the Minister for Finance the social policy objectives of this Government and of the State, in the context of meeting the needs of the elderly, the ill and those with profound physical disabilities, that are advanced by levying VAT at 23% on commodes while the VAT on the purchase of a racehorse stands at only 4.8%; if this indicates a need for a rebalancing of VAT rates generally, in order to achieve co-ordination with social policy objectives; and if he will make a statement on the matter. [39685/13]

Photo of Maureen O'SullivanMaureen O'Sullivan (Dublin Central, Independent)
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213. To ask the Minister for Finance the social policy objectives of this Government and of the State, in the context of the development of the Irish agriculture sector, that are advanced by levying VAT at 23% on raw wool, whilst investment gold, of which Ireland is not at present a major producer, is VAT exempt; if this indicates a need for a rebalancing of VAT rates generally, in order to achieve co-ordination with social policy objectives; and if he will make a statement on the matter. [39686/13]

Photo of Maureen O'SullivanMaureen O'Sullivan (Dublin Central, Independent)
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214. To ask the Minister for Finance the social policy objectives of this Government and of the State, that are advanced by levying VAT at 23% on marriage counselling, while the VAT on admission to a lapdancing club stands at 9%; if this indicates a need for a re-balancing of VAT rates generally, in order to achieve co-ordination with social policy objectives; and if he will make a statement on the matter. [39687/13]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 207 to 214, inclusive, together.

The VAT rating of goods and services is governed by the EU VAT Directive, with which Irish VAT law must comply. The VAT Directive generally provides that supplies of goods and services should be subject to VAT at the standard rate, which in Ireland is 23%. Regarding reduced rates of VAT, the VAT Directive is restrictive in relation to the application of such rates, whereby Member States may apply up to two reduced rates of VAT of between 5% and 15% but only to specific goods and services set out in Annex III of that Directive. In addition, Member States may retain a zero rate of VAT, or a rate of VAT less than 5%, on goods and services where that rate applied to those goods and services on 1 January 1991. However, no new activity can apply at those rates, and once removed activity cannot be reinstated at those rates. The VAT Directive also allows the continuation of a reduced rate on goods and services not listed in Annex III, where they carried a reduced rate on 1 January 1991, however, the Directive requires that a reduced rate of at least 12% apply to those goods and services.

In general, the VAT rates applying to the goods and services referred to by the Deputy are a result of these EU VAT rules. However, I would draw to the Deputy’s attention that catheters used for use solely or principally with urinary drainage kits or colostomy/ostomy devices apply at the zero rate of VAT. In addition, while solar panels apply at the 23% standard rate, Irish and EU law provide that where the installation of a solar panel accounts for at least one third of the cost of the supply, then the 13.5% reduced VAT rate can be applied. In relation to the hire of a limousine with a driver, this service is exempt from VAT on the basis of a derogation from EU VAT law, where Ireland applies a VAT exemption to the transport of passengers and their accompanying baggage. Furthermore, the EU VAT Directive contains detailed rules regarding the VAT treatment of investment gold in order to avoid VAT fraud, which is why the supply of gold is exempt from VAT.

In general, Ireland applies a reduced VAT rate and zero rate of VAT to a far greater range of goods and services than other EU Member States. In this regard, Ireland already applies the zero rate of VAT to basic foods, and the reduced VAT rate of 13.5% applies to most services, while tourist related services currently apply at the 9% rate. In addition, the 23% standard rate applies to most luxury goods. In this context, while there is generally scope to apply a higher rate of VAT to many goods and service, there is very little scope to do the reverse.

With regard to undertaking a comprehensive review of the different rates of VAT that are applied to different product types, the VAT system and its structure are reviewed on an annual basis in the lead up to the Budget, bearing in mind the constraints of the EU VAT Directive.

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