Terence Flanagan (Dublin North East, Independent)
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631. To ask the Minister for Health his plans to introduce a minimum VAT return for alcohol products (details supplied); and if he will make a statement on the matter. [48848/13]

James Reilly (Dublin North, Fine Gael)
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The Government has approved an extensive package of measures to deal with alcohol misuse, on foot of the recommendations in the National Substance Misuse Strategy Steering Group Report. Legislation is being developed to provide for, inter alia, a minimum unit price for alcohol. This is a mechanism of imposing a statutory floor in price levels per gram of alcohol that must be legally observed by retailers in both the on and off trade sector. As part of our work, a health impact assessment, in conjunction with Northern Ireland, has been commissioned as part of the process of developing a legislative basis for minimum unit pricing. The assessment will study the impact of different minimum prices on a range of areas such as health, crime and likely economic impact.

The provision of such a price measure for alcohol - as opposed to fiscal measures - is aimed chiefly at preventing the sale of alcohol at very cheap prices. A minimum pricing regime is a proportional policy exigency that allows the State to engage another parameter to deal with managing the supply of alcohol for the purpose of preventing its misuse. It is a policy aimed at those who drink in a harmful and hazardous manner.

Value-Added Tax is a harmonised tax within the framework of EU law. The operation of the tax in Ireland is governed by the Value-Added Tax Consolidation Act 2010, which is in accordance with EU Council Directive 2006/112/EU Council Directive 2006/112/EC. The Minister for Finance has responsibility for this legislation.

Value Added Tax (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. 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 that they incur on their business inputs used in the 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. In this regard, where a retailer is in a situation of net VAT gain as a result of below cost selling, this is not a loss to the Exchequer or an additional benefit to the retailer, it is merely how VAT is charged.