(Cavan-Monaghan): On today's Order Paper Deputy Conlon and I tabled a question asking the Minister for Finance if he was aware that furniture manufacturers in County Monaghan were finding it difficult to compete with imports of second-hand furniture. We asked the Minister if he would reduce the rate of VAT from 20 per cent to 10 per cent and if the same favourable terms for payment of VAT might be applied here as in Northern Ireland. In the course of his reply the Minister appeared to appreciate the difficulties which such manufacturers in County Monaghan find themselves in. However, he could not see his way to help those manufacturers. It is a fact that that industry plays an important part, with the poultry industry, in the economy of County Monaghan. Those industries provide a lot of employment. The furniture industry has been built up over the years by small industries and now employs more than 800 people. That must be regarded as a worthwhile industry. In common with other Border counties, County Monaghan finds it a lot more difficult to attract industries than inland counties. For that reason it is important that existing industries in the county should not be exposed to unnecessary or unfair competition. The furniture manufacturing industry is being subjected to unfair competition and under severe pressure and that is why we want the Minister to come to its aid.
I have been informed that jobs are in danger in that industry because of the unfair competition in trading. If redundancies occurred on a big scale in it the Minister would be asked by all sides to come to its aid but it is more sensible and practical to protect the industry when it is healthy rather than spend considerable sums of money in trying to rehabilitate it or trying to do a fire brigade job on it when it has been forced into a difficult position. Due to its geographical situation the industry is open to a lot of pressure from competitors in the UK and Northern Ireland. That pressure is much greater because industries in Northern Ireland and the UK operate under more favourable conditions. For example, in the UK, VAT on new furniture is charged at the rate of 8 per cent. The Minister and I disagreed today about the terms available for the payment of VAT in the UK but my information is that there is a longer period allowed for the payment of it, interest free, than there is here. I have been informed that the interest-free period in the UK is six months because no penalties are extracted if the payment is made within six months. On that basis the effective time for payment of VAT in the UK is six months.
The situation here is that if VAT is not paid within two months interest is charged. As a result of the more favourable terms available in the UK, furniture manufacturers there can make greater profits on the home market and, consequently, export here under better circumstances. I accept that they are subject to our VAT rate but because of their profit situation at home they can be more competitive. Another important point is that as new furniture is cheaper in the UK second-hand furniture is much cheaper. We are all aware that vast quantities of second-hand furniture are being imported here from the UK at very low cost. That also puts a lot of pressure on the furniture manufacturers. A lot of second-hand furniture is brought through the Monaghan customs check point. I understand that at least one container load of second-hand furniture is brought through that checkpoint daily. That furniture is not over-valued and the amount of VAT paid on it is very little, even when it is imported in an orthodox way. People who live near the Border know that a lot of things which come across the Border do not travel by orthodox roads. They very often come by circuitous routes; in other words, they are smuggled. The Monaghan furniture manufacturers have to compete with that.
Furniture in the UK is subject to VAT at the rate of 8 per cent. Furniture here is subject to a VAT rate of 20 per cent, more than double the amount of VAT imposed in Northern Ireland. This means that furniture manufacturers here have to compete with secondhand furniture, imported from abroad, very often for little or nothing, which is subject to only 10 per cent VAT. This is very unfair to a home industry in a Border county, where we have a number of difficulties. It is quite legitimate for people to import furniture up to £50 value free of tax from Northern Ireland. It pays them to go the short journey there several times and bring in various items.
I believe that I am speaking to the converted when I tell the Minister that this industry in Monaghan is under pressure. I am sure I can also speak for the furniture industry in Navan and in other counties. The Minister in his reply today said that he appreciated the difficulties. What is he doing about it? I ask him to reduce VAT on Irish made furniture from 20 per cent to 10 per cent. In reply to representations made to him he stated it was not possible to do it, but he did not go that far in his reply today. I do not believe there is any legal or administrative difficulty in doing that. In this year's budget VAT on certain luxury equipment was reduced from 40 per cent to 20 per cent. If VAT can be reduced on luxury equipment surely it can be done on furniture. Furniture is basic equipment in our homes. We hear many people talking about how well off farmers are. It is only now that many farmers in my constituency are able to furnish their homes in a modern, comfortable way.
The Minister, in reply to the representations made to him, said that he could not remove VAT from furniture without removing it from a variety of goods. I would like him to spell out on what he bases that assertion. The Monaghan furniture manufacturers have an unanswerable argument that, due to their geographical location they are operating under unfavourable conditions. They are operating in a Border county where it is difficult to attract industry. The IDA readily admit that.
The Minister can compensate the people in that area by treating this industry as substantially a Border industry. If he says furniture manufacturing is not confined to County Monaghan he will have to admit that, if he takes the town of Navan with Monaghan, a substantial amount of our furniture is manufactured in those two locations. Navan is also under severe pressure from Northern Ireland furniture. I have no doubt that an excellent case can be made for giving special attention to this comparatively young industry. Preventive medicine is better than serious surgery at a later stage. I am calling for preventive finance from the Department of Finance to ensure that this industry, which has been built up over the years, is given a fair opportunity to operate and a chance to continue to progress and to increase employment. We know that secondhand furniture is much cheaper in England, Scotland and, presumably, in Northern Ireland. It is not fair that this furniture should be brought in here and allowed to compete with home-produced furniture. I appeal to the Minister to reconsider the matter.
