As Deputies are aware, the Value-Added Tax (Amendment) Bill 1977 passed its Second Stage in November. That Bill arose out of an EEC Directive of 1977. The date for the coming into operation of the Bill, when enacted with any necessary amendments, depends on a number of factors. Representations have been received on different points and I am considering them. Moreover, decisions may be taken in Brussels postponing the date for implementation of the directive by those member states—the great majority—which have not yet enacted the necessary legislation. I cannot therefore at this stage be specific about the likely timetable for the Bill or say when the new arrangements will come into operation. Adequate notice will be given.
I should mention that I propose to add provisions to this Bill for a considerable increase in the turnover thresholds for compulsory VAT registration of traders. I have been impressed by representations made to me that the existing thresholds, which have been unchanged since VAT was introduced in 1972 are too low. The increases I have in mind raise the present thresholds generally by about 50 per cent. The cost to the Exchequer of this change, which will come into operation in due course, will be £250,000 in a full year.
I am sure this will be welcomed by many small businesses. Additionally, the Revenue Commissioners are actively pursuing at my request the question of simplification of VAT returns and records, with particular concern for the smaller businesses.
There are two VAT matters affecting farmers for which I will also be proposing to add provisions to the Bill. These are the flat-rate credit and the treatment of cattle marts.
The 1 per cent VAT recoupment allowed to VAT-registered customers of unregistered farmers was abolished in 1976. This deprived farmers of compensation for VAT borne by them on machinery and other inputs. We have already announced our intention to restore recoupment and I propose that this be effected within the 1978-79 income tax year.
The exact date will be linked with an arrangement which I have in mind in relation to the bringing of cattle marts into the VAT system under EEC requirements. This will involve treating the marts as dealers in cattle for VAT purposes. The result will be that their commission will effectively bear VAT at 1 per cent—instead of the 10 per cent which would be the case if the VAT system were applied to them in the ordinary way.