Éamon Ó Cuív (Galway West, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

206. To ask the Minister for Finance whether he intends changing the rules that to qualify for agricultural relief for capital acquisitions tax that the farm must represent 80% of the recipient of lands assets, in view of the fact that this rule mitigates against farmers on smaller holdings or holdings on poorer land particularly in the west of Ireland; and if he will make a statement on the matter. [43330/23]

Michael McGrath (Cork South Central, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

As the deputy is aware, agricultural relief allows the value of agricultural assets gifted or inherited (including farmland, buildings, stock) to be reduced by 90% of their value for the calculation of a Capital Acquisition Tax (CAT) liability. To be eligible for the relief, at least 80% of the gross market value of the property to which a person is beneficially entitled must comprise agricultural property. It should also be noted that a beneficiary may qualify for agricultural relief on non-agricultural property (such as cash) where a gift or inheritance is made subject to the condition that it be invested in agricultural property and that condition is satisfied within 2 years after the date of the gift or inheritance.

This is a valuable relief which supports the inter-generational transfer of family-farms. Therefore, a fundamental objective of this relief is that it is availed of by genuine, and active farmers, and that it relates to agricultural land which is being actively farmed.

The deputy should also note, that the Commission on Taxation and Welfare’s 2022 report recommend that the level of Agricultural relief be reduced, and that the qualifying conditions for this relief be amended to incentivise, and ensure active participation in the farm by the recipient.

With respect to the query on whether there are plans to reform the relief, the options available for the operation of agricultural relief are kept under review by my Department, and must be balanced against competing demands and as part of the annual Budget and Finance Bill process.

Michael Fitzmaurice (Roscommon-Galway, Independent)
Link to this: Individually | In context | Oireachtas source

207. To ask the Minister for Finance to provide, in tabular form, a sectoral breakdown of the estimated annual costs to the Exchequer of reverting to the previous temporary 9% VAT rate for tourism-related industries; and if he will make a statement on the matter. [43336/23]

Michael Fitzmaurice (Roscommon-Galway, Independent)
Link to this: Individually | In context | Oireachtas source

208. To ask the Minister for Finance to provide the estimated annual cost to the Exchequer of creating a specific 9% VAT, as opposed to the current 13.5% VAT rate, which would apply only to food sales, be it restaurant, takeaway, hotel food sales and so on, assuming that bed and breakfast deals would simply attract the current rate of 13.5%; and if he will make a statement on the matter. [43337/23]

Michael McGrath (Cork South Central, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I propose to take Questions Nos. 207 and 208 together.

As the Deputy may be aware, it is possible to change the VAT rate for hospitality or accommodation without reference to the other. The respective costs of extending the 9% VAT for different sectors are set out in the below table but for the year 2024 the estimated cost would be €159.5 for accommodation, €569.3m for hospitality, €24m for other entertainment, and €36m for hairdressing.

While the Deputy's assumption that under any such arrangement that bed and breakfast deals would attract the 13.5% rate is noted, Revenue believes there is likely to be still significant practical operational concerns in having different VAT rates applying to hotel accommodation and meals given how the sector operates, with various packages other than just bed and breakfast such as all-inclusive board and lodging packages.

This could lead to the underpayment of VAT because the charge for accommodation and meals would have to be apportioned. In the views of Revenue, it would undoubtedly provide opportunities for tax planning, which would be difficult to police. This would give rise to administrative and operational complexity as well as increased risk of avoidance and scope for manipulation of the VAT system.

Estimated cost in €m of applying a 9% VAT rate to tourism and hospitality sectors

Michael Fitzmaurice (Roscommon-Galway, Independent)
Link to this: Individually | In context | Oireachtas source

209. To ask the Minister for Finance if his Department has conducted a balancing exercise to determine the impact of the reversion of temporary VAT rate of 9% to the current VAT rate of 13.5% for tourism-related activities, in the context of reduced employment, closures, and so on; and if he will make a statement on the matter. [43338/23]

Michael Fitzmaurice (Roscommon-Galway, Independent)
Link to this: Individually | In context | Oireachtas source

210. To ask the Minister for Finance if his Department has not conducted a balancing exercise to determine the impact of the reversion of temporary VAT rate of 9% to the current VAT rate of 13.5% for tourism-related activities, in the context of reduced employment, closures and so on, if it will do so; and if he will make a statement on the matter. [43339/23]

Michael McGrath (Cork South Central, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I propose to take Questions Nos. 209 and 210 together.

As the Deputy will recall, I extended the 9% VAT rate for the tourism and hospitality sectors to 31 August 2023 from the previous end date of 28 February 2023. It reverted to the 13.5% VAT rate on 1 September 2023. The estimated cost of the final extension of the measure is €300m. This extension struck a balance between the cost to public finances and the provision of support for these sectors.

I made it clear at the time of the most recent extension that it was not intended to further extend this 9% reduced rate after 1 September 2023. As you may know, officials from my Department compiled a ministerial briefing on a number of measures, including the temporary 9% VAT rate. This briefing included an economic assessment of the measure. This considered the macroeconomic backdrop to any extension of the 9% rate, noting that the economy has rebounded strongly from the pandemic and that economic activity is now above pre-pandemic levels. The briefing also noted that the reduced rate is both regressive and very costly, and that this cost represents a transfer from taxpayers to the sectors which it covers.

The Government accepted the Department’s economic assessment, which found that there was no longer an economic case for the temporary 9% rate, and, therefore, decided upon a reversion to the 13.5% VAT rate. Specifically, the Government decided that the 9% VAT rate for the tourism and hospitality sectors would only apply until 31 August 2023. This decision was made in recognition of the employment provided in the sectors to which the 9% rate applies, as well as to give businesses a transition period to adapt to the changing economic and policy environment.

Michael Fitzmaurice (Roscommon-Galway, Independent)
Link to this: Individually | In context | Oireachtas source

211. To ask the Minister for Finance if he or his Department has considered splitting VAT rates on accommodation between rural accommodation providers and urban accommodation providers, given the vast differences in rates and price gouging being engaged in by some urban accommodation providers; and if he will make a statement on the matter. [43340/23]

Michael McGrath (Cork South Central, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

As the Deputy will be aware, it is a longstanding practice that the Minister for Finance does not comment, in advance of the Budget, on any tax matters that might be the subject of Budget decisions.

However the Deputy should note that the European VAT Directive, with which Irish VAT legislation must comply, would not permit VAT rates for a particular good or service to vary depending on geography.

Carol Nolan (Laois-Offaly, Independent)
Link to this: Individually | In context | Oireachtas source

212. To ask the Minister for Finance if he will reinstate the VAT equalisation measure for rental cars in budget 2024 (details supplied); and if he will make a statement on the matter. [43341/23]

Michael McGrath (Cork South Central, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I propose to take Questions Nos. 212 and 213 together.

As the Deputies will be aware, it is a longstanding practice that the Minister for Finance does not comment, in advance of the Budget, on any tax matters that might be the subject of Budget decisions.