Dáil Éireann debate -
Thursday, 25 Mar 1982

Vol. 333 No. 4

Financial Resolution No. 2. - Financial Resolution No.4: Value-Added Tax.

Minister for Finance (Mr. MacSharry)

I move:

"the Principal Act" means the Value-Added Tax Act, 1972 (No. 22 of 1972);

"the Act of 1976" means the Finance Act, 1976 (No. 16 of 1976);

"the Act of 1978" means the Value-Added Tax (Amendment) Act, 1978 (No. 34 of 1978).

(2) That section 11 (1) of the Principal Act be amended—

(a) in paragraph (a) (inserted by the Act of 1978), by the substitution of "18 per cent." for "15 per cent.", and

(b) in paragraph (c) (inserted by the Finance Act, 1980 (No. 14 of 1980)), by the substitution of "30 per cent." for "25 per cent.".

(3) That the rate of value-added tax on certain articles of furniture, furnishings and floor coverings and on certain other goods be reduced from 25 per cent. of the amount of value, as the case may be, in respect of which tax is chargeable on those goods to 18 per cent. of that amount or value, as the case may be, and that, accordingly, Part I of the Third Schedule (inserted by the Act of 1976) of the Principal Act be amended—

(a) by the insertion in paragraph (x) after subparagraph (r) of the following subparagraph:

"(rr) timber joinery; and doors, door frames, window frames, window panels, staircases and roofing trusses of any material,",

and

(b) by the substitution of the following paragraphs for paragraph (xxxi) (inserted by the Act of 1978):

"(xxxi) gramophone records;

(xxxii) furniture, including sections and parts thereof and furniture in kit form, of the following descriptions, that is to say—

(a) beds, including cots and cradles, but not including baby carriages,

(b) chairs, stools, kneelers, couches and similar goods,

(c) tables, dressing tables, wardrobes, chest of drawers, tallboys, presses, lockers, desks, and similar goods,

(d) cabinets, including cabinets specially constructed for radios, record players, speakers and television sets,

(e) playpens, safety screens, shelves, shelving and shelving units, serving trolleys, hat and coat stands, and similar stands,

but not including furniture constructed or adapted for the playing of games or for physical exercise, musical instruments, ornaments, lamps, ash trays, log boxes, coal scuttles and other hearth furniture or furniture which incorporates or is fitted with any machines or appliances.

(xxxiii) (a) floor coverings, blinds, curtains including curtain materials and parts and accessories for the manufacture of curtains, and similar furnishings, but not including wall or ceiling coverings,

(b) blankets, mattresses, sheets, pillows and other articles of bed clothing, pillows, towels and towelling material,

(c) carpet wool and canvas, and

(d) fabrics, padding materials, trimming materials, webbing and springs and springing material of a kind normally used in the manufacture of furniture.".

(4) That the rate of value-added tax on printed books and booklets be reduced from 15 per cent. of the amount or value, as the case may be, in respect of which tax is chargeable on those goods to zero per cent. of that amount or value, as the case may be, and that, accordingly, the Principal Act be amended by the insertion in the Second Schedule (inserted by the Act of 1976) after paragraph (xv) of the following paragraph:

"(xva) printed books and booklets including atlases but not including newspapers, periodicals, brochures, catalogues, programmes, books of stationery, cheque books, diaries, albums, books of stamps, of tickets, or of coupons,".

(5) That, in consequence of the amendments specified in paragraph (2) of this Resolution, the Principal Act be further amended—

(a) in section 11 (2)—

(i) in paragraph (b) (inserted by the Act of 1978), by the substitution of "16.67 per cent." for "20 per cent." (inserted by the Finance (No. 2) Act, 1981 (No. 28 of 1981)), and

(ii) in paragraph (c) (inserted by the Finance (No. 2) Act, 1981), by the substitution of "16.67 per cent." for "20 per cent.",

and

(b) in section 12 A (inserted by the Act of 1978), by the substitution in subsection (1) of "1.8 per cent." for "1.5 per cent." inserted by the Finance (No. 2) Act, 1981).

(6) That, in consequence of the amendments specified in paragraph (4) of this Resolution, the Principal Act be further amended—

(a) in section 11 (1) (b) (inserted by the Act of 1978), by the substitution of "(xva)" for "(xv)",

(b) in section 15 (2) (inserted by the Act of 1978), by the substitution of "(xva)" for "(xv)",

(c) in the Third Schedule (inserted by the Act of 1976), in Part I—

(i) by the substitution of the following paragraph for paragraph (vii)

"(vii) printed books and booklets other than those specified in paragraph (xva) of the Second Schedule and books of stationery, cheque books, diaries, albums and books of stamps, tickets or coupons;" and

(ii) in paragraph (ix), by the deletion of ", atlases".

(7) That this Resolution shall have effect as on and from the 1st day of May, 1982.

(8) It is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under he provisions of the Provisional Collection of Taxes Act, 1927 (No. 7 of 1927).

This resolution proposes a package of VAT amendments which involve changes both in the level and coverage of the different rates of VAT and they are as follows. It increases the present low rate from 15 per cent to 18 per cent, excluding books. It increases to 30 per cent the charge on goods and services——

Mr. Bruton

We have to put the resolution yet. We just voted on the amendment.

Mr. MacSharry

I am moving the resolution.

Mr. Bruton

The Minister is moving the resolution on VAT but we have not finished the resolution on income tax.

An Ceann Comhairle

It was put, Deputy Bruton. Deputy Bruton seems to be questioning a number of my rulings, but it was agreed. Is that all right?

Mr. Bruton

I think that was somewhat speedy of you, Sir.

An Ceann Comhairle

I am sorry, Deputy Bruton, if you were not paying attention. but I am not responsible for that. You must pay attention if you wish to pass criticisms. The Minister has moved Financial Resolution No. 4.

Mr. MacSharry

This resolution proposes a package of VAT amendments which involve changes both in the level and coverage of the different rates of VAT. These are as follows.

First, it increases the present low rate from 15 per cent to 18 per cent, excluding books. Second, it increases to 30 per cent the charge on goods and services— excluding furniture, joinery, floor coverings, bed linen and household furnishings which are being transferred to the low rate — which are at present liable at 25 per cent. Thirdly, it reduces the rate of VAT on furniture, floor coverings, bedding and bed linen and household furnishings from the present 25 per cent rate to the new 18 per cent rate. It reduces the rate of VAT on books from the present 15 per cent rate to zero.

Arising from the increase in the main VAT rates it raises from 1.5 per cent to 1.8 per cent the level of the flat-rate percentage paid to farmers as an addition to the price of their produce in compensation for the tax borne by them on their purchases of taxable goods and services.

It makes provision to ensure that despite the increase in the general VAT rates the existing 3 per cent effective rate on buildings will be preserved, and it makes similar provision in respect of the services of agricultural contractors to which the 3 per cent rate was extended in the July budget.

Mr. Bruton

I have an amendment to this resolution which is designed to ensure that the decision taken by the Government to collect at an earlier date VAT on imports will not apply to raw materials for further processing because I believe that this will do damage to the many industries in this country which reply on imported raw materials for further processing. It will require those industries to raise substantial capital to pay VAT in advance on the date on which——

An Ceann Comhairle

Are you speaking on your amendment?

Mr. Bruton

Yes.

An Ceann Comhairle

Your amendment is out of order.

Mr. Bruton

Why?

An Ceann Comhairle

Let me explain why. It imposes tax on cider and perry and this is general VAT.

Mr. Bruton

Sir——

An Ceann Comhairle

I am told it is Resolution No. 4, VAT in the case of articles other than consumer goods. Is that the amendment you have?

Dr. FitzGerald

This is No. 14. What has that to do with cider and perry?

An Ceann Comhairle

Resolution No. 4 is general VAT, is it not?

Mr. Bruton

What has it to do with cider or perry?

Dr. FitzGerald

The Minister is speaking to Resolution No. 14.

An Ceann Comhairle

We are on Resolution No. 4. We are all becoming a little confused.

Dr. FitzGerald

Where is cider and perry?

Mr. Bruton

Even the Ceann Comhairle can make a mistake.

An Ceann Comhairle

He can be wrongly advised, if I may say so.

Mr. MacSharry

If Deputy Bruton would give way to me.

Mr. Bruton

I am sorry.

Mr. MacSharry

I understand that the reason the amendment was ruled out of order is that it is not included in the resolution before the House and that the matter of the imposition of VAT at point of entry on imports will be dealt with in the Finance Bill. Between now and then the precise details of it will be worked out.

Mr. Bruton

The point is that the decision to impose VAT at point of entry on raw materials is very damaging to Irish industry because it will force industry to borrow money to pay tax in advance of when it would normally pay it. It should be able to borrow this money to expand its productive base. It will draw money out of the banking system into the financing of this advance tax payment and this money should be available either to keep interest rates down or to help general productive investment rather than for this artificial advance tax payment. I accept that there is a case for advance VAT payment in respect of consumer goods, because imported consumer goods should be discouraged to the extent that one can discourage them by requiring an earlier payment of VAT; but one should not discourage in the same way raw material for processing by industry. Industry gives jobs and anything that increases, even temporarily, the cost of industry is bad for employment. That is why I was very anxious to raise this matter by means of the amendment I am proposing here. The Chair has ruled that this is out of order, although he gave the wrong explanation for his ruling.

An Ceann Comhairle

It is out of order because there is nothing in this about tax at source. That is the reason.

Mr. J. Bruton

That would appear to be the reason but it is not acceptable to me.

An Ceann Comhairle

I am sorry.

Mr. J. Bruton

This provision in regard to advance payment will damage industry. I have made the point and will do so again on another occasion. Unfortunately I cannot pursue my amendment.

I welcome the reduction in VAT on furniture and furnishings. This is a very valuable proposal and will assist those setting up home by reducing the cost of furnishing a house. It must be recognised that furniture, beds, carpets and chairs should not bear the luxury rate of VAT and I am glad the Minister has accepted the proposal made in my budget to reduce the level of VAT applied to these commodities.

I am glad it has been possible to reduce to zero the level of VAT on books and I recognise the help this will be to the propagation of knowledge in our community and to the book industry. It is a welcome measure but I would inquire as to the procedures which must be adopted to obtain permission, if such permission is necessary, for the introduction of a new zero-rate of VAT. I understand that under EEC rules it is not possible — at least I was so advised — to introduce any new zero-rates into our VAT system. Perhaps the Minister would say what advice he has received on the matter and whether he has the consent of the Community for this provision.

Mr. MacSharry

I will not reply to the first point since it would be out of order. The EEC laws allow for marginal changes in the coverage of existing zero-rates. This is a significant change but rather small in the context of our VAT system as a whole and given that I am bringing a large number of exempt services into the system, I believe we will be able to get EEC sanction for the package as a whole. We are being consistent with EEC objectives in this.

Mr. Dukes

Has the Minister taken any steps to ensure that he will get EEC agreement on this? As I understand it, he has just said it would be his intention to put this package into the EEC system. Is he not sure that he will get agreement and has he already taken steps to get that agreement?

Mr. MacSharry

We do not have to obtain their permission. If they want to object to it they can come to us. In the context of the package as a whole I believe it will be acceptable to the EEC.

Mr. Dukes

I know that the Minister has a publicly stated proclivity for breaking rules but there is an EEC directive governing these matters and as a member of the Community we are obliged to apply that directive. In the normal course of events I do not think the application of the directive would leave us the freedom to go ahead and do something which might be contrary to the terms of the directive and have to catch up with it afterwards. It would have been wise to clear the decks and see what the situation was before taking action of this kind so that we would not have to undo it in the event of its being unacceptable. I again ask the Minister whether he has received clearance for this matter and, if not, whether he intends to take up the matter with the Community authorities before the date on which this change would become effective.

Mr. MacSharry

I said at the outset that EEC laws allow for marginal changes in the coverage of existing zero-rates. I am taking this step under the existing directives and if the EEC wish to challenge it they will come to us on the matter. Only then would any problem arise. I am satisfied that the package as a whole will be acceptable.

Dr. FitzGerald

Is the Minister in a position to give us an assurance that what is proposed is compatible with the EEC directive? If he can give that assurance and tell us that he will not have to come back to the House with a Finance Bill differing from this because of the EEC directive, then we will accept it and go ahead.

Mr. MacSharry

What does the Deputy mean by asking me to give an assurance?

Dr. FitzGerald

Can the Minister give an assurance that in passing this resolution the House is not acting in conflict with an EEC directive which will require the House subsequently to enact legislation differing from this?

Mr. Wilson

Why should the UK have zero-rating on books?

Dr. FitzGerald

The concept of zero-rating on books is one which we certainly support. If the Minister can give us an assurance that it is compatible with EEC directives and that there is no danger of its being brought down, we will certainly support it wholeheartedly. If he is in any doubt, however, and cannot give that assurance, I wonder whether it would be wiser for us to impose a nominal rate of tax rather than a zero-rate. We are working together on this problem. Might it not be wiser to impose, say, 1 per cent rather than a zero rate? If the Minister can give us an assurance that there is no problem then we will accept it, although the words "no problem" from him might carry different weight than they might from another Minister. If he cannot give an assurance that it will not be struck down under an EEC directive I suggest that he insert a nominal figure such as 1 per cent.

Mr. MacSharry

I am proposing this resolution and I can give the assurance to the Deputy. If at some future date the EEC refer to this measure or advert to it in any way, then it is a matter for legal action by the EEC in the courts if legal opinion so advises. I am quite satisfied that I can give the Deputy the assurance he seeks.

Dr. FitzGerald

Can the Minister give an assurance that this is compatible with the directive?

Mr. MacSharry

Yes.

Dr. FitzGerald

All right. We will, of course, hold the Minister to that.

Mr. MacSharry

I will stand by it.

Mr. Dukes

I am not sure that I really understand what the Minister has said. Earlier he seemed to indicate that he was not entirely clear whether this was compatible. Now he has given an assurance that it is compatible. Earlier he spoke of a possible need to clear this with the EEC authorities. I again ask whether he has taken any advice on this matter? My understanding is that when the relevant EEC directive was passed it was clear that existing zero-rates were confirmed and could be continued but that there was a serious limitation on the ability of member states to introduce new zero-rates.

I submit that the measure the Minister proposed and which we support can be presented as being a marginal change in the application of the VAT rates. If it were a marginal change it would have been done a long time ago and we should not have had the difficulties which have arisen on the definition and the financial impact of the measures.

Again I ask the Minister if he proposes to clear this matter because there is a wide measure of doubt, even in his own mind, about whether he can proceed in the way he proposes and which we agree would be desirable.

Mr. MacSharry

Maybe I am not expressing myself clearly but I want to repeat that EEC laws allow for marginal changes in the coverage of existing zero rates. That is the EEC position.

Mr. Dukes

Marginal changes in the coverage of existing rates.

Mr. MacSharry

In the context of the overall coverage of VAT we are taking a minor step. That situation exists at present in the United Kingdom, where books are zero-rated.

Mr. Dukes

Where they exist at zero-rating——

Mr. Wilson

Nit-picking.

Mr. Shatter

The Minister seems to be contradicting himself. He assures the House that he thinks we are complying with the EEC directive but I do not believe we are. Then he says that even if we are not, proceedings can be brought by Brussels against this State in the European Court. In principle I support the removal of VAT from books, but can the Minister give us an assurance that this provision will not result in this State being brought before the European Court with an eventual rescinding of what the Minister is trying to do? If a nominal VAT rate was imposed it would not be open to attack under the directive in the same way as a zero rating would be under existing EEC law.

Mr. MacSharry

I have already replied to that question.

Mr. Shatter

Can the Minister give an assurance that there will not be proceedings brought against this State as a result of the introduction of zero VAT rating on books?

Mr. MacSharry

That is my view and I have given that assurance.

Dr. FitzGerald

The Minister has not given that assurance.

Mr. MacSharry

Are we going to start interpreting what everybody says?

Mr. Dukes

We want to make sure we know what the Minister is telling us.

Mr. MacSharry

I have answered that question when it was asked by Deputy Dukes, then Deputy FitzGerald, and again I am being asked the same question.

Dr. FitzGerald

The Minister has given two different answers.

Mr. MacSharry

I am sorry if the Deputies did not understand what I said the first time.

Dr. FitzGerald

The Minister must understand that we are confused. First he says he thinks it is all right; then he says he is sure it is all right. Then he tells us if it is not all right it is up to the EEC to take an action against us; then he says he is sure the EEC will not take an action against us. The Minister will forgive us for being confused after that series of statements, each of them incompatible with the previous one.

Mr. MacSharry

They are two separate questions on two separate issues. It is not a matter for us but for the EEC. I answered a question on notification to the EEC of marginal changes under existing directives which I am allowed to do and I am giving Deputies the assurance they asked for.

Dr. FitzGerald

Is the Minister telling us that the existing directive does not require notification of what he describes as marginal changes? Is he giving the House that assurance as to the wording of the directive? Would he consult before replying?

Mr. MacSharry

No prior notification is required.

Dr. FitzGerald

Even for what he describes as marginal changes?

Mr. MacSharry

If they are already there——

Dr. FitzGerald

I wonder.

Mr. G. Birmingham

The summary of the budget proposes to provide that a whole range of services which at present are not liable for VAT will now become liable — actuaries, solicitors, barristers and such people. It also provides changes in the rate of VAT which other services pay at present, but there does not seem to be any reference to this in the resolution. Why?

Mr. MacSharry

I am sorry. I should have referred to that earlier. The Finance Bill will cover the termination of the exempt status for certain exempted professions, the VAT charge on imports and the deferment of the low VAT rate increase for certain tourist services to non-residents. It was not necessary to have them included in this resolution.

Mr. G. Birmingham

Because of the operative date?

Mr. MacSharry

Yes.

Mr. Shatter

Taking it that the Minister is satisfed he can zero-rate books within the present EEC context, how will there be a differentiation between booklets which are to be zero-rated and periodicals which are not, when there does not seem to be a definition of the difference between a booklet and a periodical contained in this resolution? I presume the Minister has considered the possible zero-rating within the context of other items referred to in subsection (4) of this resolution. Has he considered the possibility of zero-rating newspapers for VAT purposes? If he did and if the financial consequences were considered, could he indicate if there was any possibility, in the light of the difficulties being experienced by the provincial press at present, of extending the zero-rating to newspapers?

Mr. MacSharry

That type of extension could have led to the situation the Deputy referred to earlier. On the question of books vis-à-vis periodicals, magazines and newspapers, it is the Revenue Commissioners who will decide the zero-rating on books. There is a differentiation between books and periodicals, magazines and newspapers.

Mr. Shatter

Could the Minister tell us the financial consequences of zero-rating VAT on newspapers? We have a figure of £2.5 million for the removal of VAT from books and booklets.

Mr. MacSharry

The figure for books, including school books and books, not periodicals, magazines and newspapers, is about £2.5 million in 1982, running to something of the order of £15 million if extended to periodicals, magazines and newspapers.

Mr. Shatter

And £11 million more if it was extended to newspapers?

Mr. MacSharry

If it were extended to periodicals, magazines and newspapers it would add £22 million in a full year.

Mr. Shatter

Has the Minister considered that there are a number of periodicals of an educational nature which are used widely in schools and third level education? A similar case could be made for zero-rating periodicals as for zero-rating books.

Mr. MacSharry

I appreciate the Deputy's views on many of these issues. Every public representative has been very concerned about VAT on school books. There is great difficulty in making a distinction between school books and other books. There is not as great a difficulty in making a distinction between school books, books and then periodicals, magazines and newspapers. Taking into account that in this case I was covering school books, I was satisfied to zero-rate books as such.

Mr. Shatter

In the context of differentiating between booklets and periodicals, I respectfully suggest it is a matter for more precise definition than this. It is proposed to leave it to the authorities to determine when matter is coming into the State. There are booklets and periodicals which may be printed three or four times a year and which at the moment are used in relation to education and in the professions. I will give an illustration of this. There are law reports, some of which are published and produced weekly and there are other legal reports which are only produced two or three times a year. There are books of a similar nature which are only produced two or three times a year. Could the Minister indicate what the difference is and how it can be determined which are booklets and which are periodicals? There is a very fine distinction to be made.

Mr. MacSharry

The Revenue Commissioners will decide on the definition. A list of the definitions will be published tomorrow. In all such cases anybody who feels aggrieved can argue about that definition as outlined by the Revenue Commissioners.

Mr. Shatter

Is the Minister saying the definition list will be published tomorrow?

Mr. MacSharry

Yes.

Mr. Shatter

That is an extraordinary statement. The Minister is suggesting that we should pass a Financial Resolution determining zero-rating on some printed works and 18 per cent VAT rate on other printed works without our knowing exactly what works it extends to. I suggest, having regard to the function of this House, that if a definition, as the Minister now tells us, is to be made available, it should be defined within the terms of the resolution before the House. I fail to understand how Members of the House can vote on a matter without knowing exactly what publications are to be zero-rated and what publications are to be rated at 18 per cent VAT. I suggest to the Minister that, if this definition is available, he propose an amendment to this resolution including the definitions, stating clearly what is a booklet and what is a periodical within the terms of the resolution before the House tonight.

Mr. G. Birmingham

I suggest that the Minister might follow the example of his colleague, the Minister for Trade. Commerce and Tourism, who earlier, to his advantage, allowed us to see a draft of the proposed maximum prices order. The Minister must now know the definitions which will be proposed tomorrow. We might make some progress if he could tell us what that definition is.

Mr. MacSharry

The goods which are excluded from the reliefs include advertising brochures, race cards, sports and theatre programmes. These will be liable at 18 per cent if in the form of books or booklets; otherwise the 30 per cent rate will apply. Magazines, newspapers, periodicals, including missalettes and comics, will be liable to the 18 per cent rate. Maps and globes will be liable to the 18 per cent rate. Cheque books, diaries, notebooks and stationery, books of tickets and so forth will be liable at 30 per cent.

Mr. Shatter

That still does not clarify the difference between a booklet and a periodical. It merely indicates certain items which will be rated at 18 per cent. I respectfully suggest to the Minister that that still leaves a grey area in which it will not be known what is zero-rated and what is rated at 18 per cent. I would like also to draw the Minister's attention to the fact that if he intends that periodicals retain a VAT rating of 18 per cent there are a number of periodicals produced by charitable and religious organisations to raise funds and they are as worthy of being zero-rated as other items?

The Minister might reconsider, within the context of this Resolution, two additional items which affect families with children, especially those with a large number of children, on which the Minister intends retaining 18 per cent VAT rate. In the context of paragraph (4) of this Resolution, the Minister seems to have some vindictive approach to comics which I do not understand. Possibly he might consider that children's comics like children's books should not be VAT-rated at 18 per cent. Could the Minister indicate his particular thinking in this regard? Not only does he intend retaining 18 per cent VAT on comics but for some reason, if one looks at subsection (3) (b) of this Resolution, whilst reducing the VAT rating from 25 per cent to 18 per cent for beds, including cots and cradles, he wants to retain 25 per cent rating for baby carriages. Could the Minister explain the thinking behind that?

Dr. FitzGerald

Baby carriages are wheeled vehicles.

Mr. MacSharry

They are not house furnishings.

Mr. Shatter

Baby carriages are as relevant and as essential to a home and family with young babies as cots. I suggest to the Minister that rather than excluding baby carriages he has within this resolution the chance to include baby carriages.

An Leas-Cheann Comhairle

The Deputy is not in order in suggesting what might be in the resolution. We are discussing what is in the resolution and I have explained that already.

Mr. Shatter

I am merely indicating the rather peculiar and odd distinction drawn in the resolution before the House. The resolution is before the House tonight and we will be voting on it. I suggest to the Minister, in the context of the problem concerning zero-rating on books, that it is not clear to what it applies. For some reason the Minister seems to believe that all books, including children's books, should be zero-rated, and for some very odd reason comics should have an 18 per cent VAT rate. I suggest this is very inconsistent. I also suggest it is relevant to the resolution before the House. The Minister feels that he must retain the 25 per cent VAT rate on baby carriages when clearly within the context of this resolution baby carriages could be reduced to 18 per cent VAT rate. I propose an amendment to this resolution to the Minister to reduce the VAT rate on baby carriages from 25 per cent to 18 per cent and I ask the Minister to accept it.

An Leas-Cheann Comhairle

It would not be possible to take an amendment now.

Dr. FitzGerald

Why?

An Leas-Cheann Comhairle

It is too late.

Dr. FitzGerald

I cannot understand that ruling. There have been many debates in the House when amendments have been presented even verbally during the debates and there was no difficulty about that, especially when legislation came forward at short notice. We have had these resolutions for only a couple of hours. Surely we are not being told now that as the debate proceeds and we discover the absurdities of the situation, when the Minister with a perfectly straight face has put them to us, we are not in a position, having discovered these absurdities, to take any action about them on the grounds that the amendment was not down in time? How could we put down an amendment in relation to the subtle distinction between missals, which are free of VAT, and missalettes handed out in churches on Sunday, which are 18 per cent VAT rated, and the Minister had not told us about this distinction until a few minutes ago? I was not aware, and I do not know if any Member of the House is aware, of this distinction until the Minister told us about it?

An Leas-Cheann Comhairle

If Deputy FitzGerald would give way for a moment, I might explain to him that when he is talking about a precedent in respect of amendments to Financial Resolutions the precedent is that when discussion has commenced it is too late to submit an amendment. Accordingly there is no tradition for accepting amendments in these circumstances.

Dr. FitzGerald

I assure you from my experience that in debates I have had the experience on a number of occasions in the course of debate of putting forward amendments verbally and having them accepted and on other occasions writing them out and having them accepted in the middle of the debate on the subject. I have to tell the Leas-Cheann Comhairle that he is incorrect in so ruling.

An Leas-Cheann Comhairle

The Leas-Cheann Comhairle is not incorrect. The Leas-Cheann Comhairle has been informed by the Ceann Comhairle in respect of an amendment, a copy of which is before him, that he had ruled it out of order because it was received too late. The Deputy cannot act either as Ceann Comhairle or Leas-Cheann Comhairle. It is not his function and he must accept the ruling of the Chair.

Dr. FitzGerald

On a point of order, I do not know what you mean by saying that the Ceann Comhairle ruled when the amendment has not come before the House yet. The Ceann Comhairle is not here but you may wish to rule on the amendment when it comes before the House.

An Leas-Cheann Comhairle

I have indicated in respect of a written amendment that was submitted that the Ceann Comhairle had ruled it to be out of order.

Dr. FitzGerald

How could the Ceann Comhairle who is not here rule on an amendment that has not yet come before the House?

An Leas-Cheann Comhairle

The Deputy is fully aware of the position on Financial Resolutions whereby when debate has been entered into it is then too late for an amendment to be accepted. I would ask him to accept that position.

Dr. FitzGerald

Not only am I not aware of that but I have had frequent experience of putting in amendments during debates and of having them accepted. In some cases these were verbal amendments and if I have sufficient time I shall find evidence of them. The Leas-Cheann Comhairle may decide to rule against me but he is not doing so on the basis of precedent.

An Leas-Cheann Comhairle

The Deputy must accept that what the Chair is doing is in accordance with the correct interpretation of the Standing Orders of the House and is in accordance also with tradition.

Dr. FitzGerald

In that case I have been misguided by previous occupants of the Chair in one or other House. There is no question of there not being precedent in this instance. However, on the point in question the Minister has just disclosed to us these subtle distinctions, that, for instance, maps carry an 18 per cent VAT rate but that if put together to form an atlas they are zero-rated. What is the logic of this distinction? It is reducing the debate to the level of absurdity. If we are to draw lines might we not draw them somewhere sensibly instead of making an analysis of missalettes?

Mr. MacSharry

The Deputy has been here long enough to know the procedures and to know that the Revenue Commissioners decide the definitions in all these matters. They have drawn up the list that I have read out and these definitions are not appropriate for legislation.

Dr. FitzGerald

The Minister may say that it is not appropriate to legislate for these definitions but it is certainly not appropriate for the Revenue Commissioners to introduce such curious distinctions or for the Minister to justify them here. If we are to make such distinctions let us make them here in the House because I do not think that the power to make such comical distinctions should be vested in anybody other than the House, that is, if the House wishes to act in a comical way.

Mr. Lawlor

If there are anomalies in the list surely they can be dealt with when the Finance Bill is before the House and when Deputies may table amendments if they so wish instead of the House being delayed in this way now.

Mr. G. Birmingham

The subject of law reports has been mentioned already in this debate. I might explain to the Minister the options that exist for someone who subscribes to a particular series of law reports. These reports are published from time to time but not always at regular intervals in booklet form and they can be taken up on that basis. Alternatively, a person has the option of waiting until the end of the year when the reports arrive in the form of a bound volume. It seems extraordinary that if they come on an irregular basis throughout the year in booklet form one runs the risk of having them deemed to be periodicals whereas if one decides to be out of date and to wait until the end of the year one will find himself free of 18 per cent VAT. How would the Minister seek to justify that situation?

Mr. MacSharry

I do not think that situation would arise. I have given the list of items that would be excluded but perhaps it would be appropriate for me to state how the Revenue Commissioners have listed the definition of requirements that would be necessary for zero-rating. These are that the cover of the book must be distinctive, that at least the outside of the front cover must be devoid of the text, must comprise not fewer than four leaves, that is eight pages exclusive of the cover, and must be bound loosely or otherwise or stitched or stapled. The example given by the Deputy would be a zero-rated item.

Mr. G. Birmingham

That is helpful but it is something that I asked the Minister to read out about a hour ago.

Mr. Shatter

I presume that is the definition of a book or of a booklet within the meaning of the definition.

Mr. MacSharry

For the purpose of warranting zero-rating.

Mr. Shatter

The vast majority of periodicals would come within that context so that we could create the situation in which if in one month a periodical had on its front page half a dozen sentences it would have to be VAT rated at 18 per cent while in the following months if it carried a pleasant picture on the front with just the title, it would be zero-rated. That would be a difficult and illogical distinction to have to make. Retail outlets who will have to operate the legislation will find themselves in total chaos. In the light of the anomalies that he has highlighted concerning zero-rating books but not periodicals, would he now consider withdrawing the resolution and resubmitting it next week in a form that is acceptable to the House?

In the context of the possibility of amending the resolution at this stage, I would point out that it is only as a result of the debate this evening that we have some form of definition as to what is meant by books and booklets and periodicals. This was not referred to in the budget statement and is not defined in the resolution before us. If the Members of this House wish to know what they are voting on, these terms should be fully defined within the resolution. That is why I suggest that the resolution be resubmitted. This would also give the Minister an opportunity to consider zero-rating both newspapers and periodicals and of reducing the VAT rating on baby carriages from 25 to 18 per cent. I see no rationale in retaining a 25 per cent rate on baby carriages while reducing the rate on cots. There are many families for whom the baby carriage acts as the cot so that there is very little distinction there. Are we to have a situation in which a cot from which the wheels are detachable is to be VAT rated at 18 per cent while one from which the wheels are detachable is to be VAT rated at 25 per cent. With respect, I suggest to the Minister that by failing to deal with these matters in the context of the resolution he is reducing the resolution to absurdity and he should reconsider it and resubmit it to the House next week.

Mr. MacSharry

I have answered the same question 20 times. I said that the normal procedures are being followed. The definition of books and booklets will be published by the Revenue Commissioners as and from tomorrow. Anybody has the right to appeal against the decision of the Revenue Commissioners, and the Revenue Commissioners may or may not accede to that request depending on the circumstances.

Mr. Molony

It is the definition that is wrong.

Mr. Shatter

I suggest it is for this House to determine the definition of terms about which we are legislating. It is not for the Revenue Commissioners to act as legislators. There is no reason why the definition referred to should not be contained in this resolution. The Minister is suggesting that tomorrow the Revenue Commissioners can publish their own definition, and possibly the next day a different definition, and the day after that publish a third definition. Members of this House should know what we are being asked to consider. I asked the Minister specifically why he is not willing to zero-rate children's comics. I pointed out to him that he is increasing the VAT rating on children's comics by 3 per cent.

Mr. Molony

The main problem we have had is with the definition which the Minister read to the House a few minutes ago. Is that the definition which has been produced by the Revenue Commissioners or is it the definition we are voting on tonight? That definition should be reviewed in the light of the points made by Deputies on this side of the House.

Mr. MacSharry

It is the definition of the Revenue Commissioners as I have already said. I should like to remind some of the newer Deputies who might forget what happened in January, that what we are doing is taking off 18 per cent which would have been put on if the January budget had been successful. Let us be realistic about what we are talking about.

Mr. Dukes

The point has been made on this side of the House in all seriousness that we share the objective which the Minister has put before us.

Mr. MacSharry

The Opposition are making a joke of it.

An Leas-Cheann Comhairle

I would ask Deputies to allow Deputy Dukes to make his point without interruption.

Mr. Dukes

What we do not accept is the Minister's apparent uncertainty about whether or not he can do this in terms of EEC legislation. We also do not accept that this House should be asked tonight to decide on a series of measures the definitions of which we do not know and which are being dragged piece by piece out of the Minister. Why can he not put a list of definitions before us? Why can he not present us with a complete resolution? It is reasonable for us to ask for the information we require to enable Deputies on this side of the House, and Deputies over there also, to know what precisely will be charged at a VAT rate of 18 per cent.

Mr. Reynolds

We are happy over here.

Mr. Gallagher

(Mayo West): Deputies opposite have the remedy in their hands.

Mr. Molony

We are dissatisfied with the wording of the definition. I suggest that the wording of the resolution should be reconsidered to enable the Revenue Commissioners to introduce a definition which would be more reasonable and make more sense.

An Leas-Cheann Comhairle

I take it that we have exhausted the discussion on the matter of what information is required. I will put the question now that Finance Resolution No. 4 be agreed.

Mr. Boland

The reason Deputy FitzGerald entered the amendment to zero-rate newspapers and periodicals and to exclude them from the second line of the subsection, is that it appears to us that if it is now possible to zero-rate books and booklets, contrary to earlier advice given, it should be possible also to zero-rate newspapers and periodicals. In view of the fact that the majority of books and booklets sold here are produced abroad and imported, it appears to be eminently reasonable that if a device has been found whereby zero-rating can be introduced for part of the printed word it should also apply to home produced newspapers and periodicals. I am sure there are people on the Government side of the House who appreciate that point.

An Leas-Cheann Comhairle

Does the Deputy realise he is now discussing a matter which is not in the resolution and, that being the case, it is not in order to discuss it?

Mr. G. Birmingham

That is nonsense.

An Leas-Cheann Comhairle

It is not nonsense. It is correct.

Mr. Boland

Subsection (4) reads:

(4) That the rate of value-added tax on printed books and booklets be reduced from 15 per cent. of the amount or value, as the case may be, in respect of which tax is chargeable on those goods to zero per cent. of that amount or value, as the case may be, and that, accordingly, the Principal Act be amended by the insertion in the Second Schedule (inserted by the Act of 1976) after paragraph (xv) of the following paragraph:

"(xva) printed books and booklets including atlases but not including newspapers, periodicals, brochures, catalogues, programmes....

An Leas-Cheann Comhairle

Newspapers are excluded from the resolution.

Mr. Boland

I know that, and that is why I am entitled to make the point. This is the reason why Deputy FitzGerald entered his amendment to delete newspapers and periodicals from the exclusion.

An Leas-Cheann Comhairle

I have already explained to Deputy FitzGerald, and he accepts it, that there is no precedent for entering an amendment after the discussion had commenced on a Financial Resolution. Therefore, it is not in order to talk about an amendment which is not before the House.

Mr. Boland

It is in order to talk about the content of the resolution which seeks to continue and increase the rate of VAT on newspapers and periodicals. Had it been in order to do so, I am sure Deputy FitzGerald would have introduced an amendment to zero-rate newspapers and periodicals because books and booklets are now to be zero-rated. However, since the Chair ruled that the amendment he sought to introduce was not in order he was not able to introduce it. That does not prevent the House from discussing the question as to whether newspapers and periodicals which are home produced should not be zero-rated.

The bulk of the books and booklets sold here are imported from abroad. That now seems particularly unfair bearing in mind the consistent advice given by various Ministers for Finance that it was not possible to zero-rate any printed item. If a device has now been found to allow zero-rating of books and booklets, it appears to be eminently fair that that zero-rating should also be extended to newspapers and periodicals.

We all know that the answer given consistently to the publishers of newspapers at national and provincial level was that they could not be exempted from value-added tax because the State was precluded from doing so by EEC regulations. Apparently a device has now been found to allow imported books and publications to be zero-rated, while home produced periodicals and national and provincial newspapers are to have their rate of VAT increased by 3 per cent. That appears to us to be extremely unfair. If a loophole has been found then it should be availed of to bring some relief to the Irish publishing and newspaper industry. I should like the Minister to explain to us his reference to the question of it being possibly all right to zero-rate books and booklets but potentially not possible to introduce a zero-rating on newspapers and periodicals. The Minister referred to that about 20 minutes ago. I wonder if he could expand on his remarks in relation to that.

Mr. MacSharry

In relation to which part of what the Deputy said?

Mr. Boland

If the Minister does not understand, I am sure his colleague sitting beside him could explain it to him.

Mr. MacSharry

One matter to which I should like to respond immediately is the Deputy's remark that there was discrimination against home-produced matter as against imports. That is not the case. Books and booklets, whether printed at home or imported will be zero-rated.

Mr. Boland

Because the bulk of books sold in this country are imported it appears to be discriminating against the national and provincial newspaper trade, an entirely home-based industry. They will now be discriminated against because other printed word material will be sold without any value-added tax being imposed while they will continue to carry value-added tax, and at an increased rate. The question I addressed to the Minister was in relation to a remark he made some 20 minutes ago suggesting that, were he to extend the zero-rating to newspapers and periodicals, it might then create difficulties for him in relation to strictures from the European Community whereas in his opinion zero-rating on books and booklets would not. Could the Minister explain to the House the reason he might find difficulty in zero-rating newspapers which are home-produced and not in zero-rating books or booklets?

Mr. MacSharry

Apart from the reasons the Deputy has outlined the main reason is that in this year alone it will cost £13½ million to do what the amendment suggests and in a full year £27 million. It was hard enough to find the £4.9 million to do what we did.

Mr. Lawlor

A good reason for not doing it.

Mr. Bellew

What was the Deputy at for seven months in his Cabinet?

Mr. Boland

I must congratulate the Deputy on his maiden speech.

(Interruptions.)

Mr. Power

One of the people over there interrupted him when he was making his maiden speech yesterday, and he was over four-and-a-half years of age when he made it too.

Mr. Boland

I hope it was not Deputy McCreevy.

Mr. Power

He was able to make it without the benefit of any pre-schooling.

Mr. Boland

Pre-schooling disappeared from the budget today.

An Leas-Cheann Comhairle

Deputy Boland, without interruption, on Financial Resolution No.4.

Mr. Boland

As time goes on more information becomes available to the House. The Minister suggested some 25 minutes ago that it would cost approximately £11 million extra were he to have zero-rated newspapers and periodicals. He is now explaining to us that it will cost £27 million extra——

Mr. Lawlor

In a full year.

Mr. Boland

Perhaps he could give us some idea which of those two figures he presented to the House is the correct one. Secondly, perhaps he could explain to us his remark that he would have difficulty with the European Commission were he to zero-rate newspapers and periodicals but not zero-rate books and booklets, as he is now attempting to do.

Mr. Gene Fitzgerald

Is the Deputy disappointed that school books have been exempted?

Mr. MacSharry

I am sorry if I have confused the Deputy. I should say that the £11 million was at the 15 per cent rate and the £13½ million was at the 18 per cent rate. The £27 million is at the 18 per cent rate for a full year. The £11 million was at the 15 per cent rate.

Mr. Boland

Is there a particular European distinction between zero-rating books as opposed to zero-rating newspapers?

Mr. Reynolds

We spent 20 minutes talking about The Beano and The Dandy.

(Interruptions.)

Mr. Reynolds

There is a whole line of lawyers over there who spent 15 minutes talking about The Beano and The Dandy.

(Interruptions.)

An Leas-Cheann Comhairle

Deputy Boland with a final question.

Mr. Boland

The point I am trying to establish is a genuine one. All of us who are in this House for longer than three weeks will have——

Mr. Gene Fitzgerald

Patronising——

Mr. Boland

——received over the years representations from the publishers of Irish newspapers on the desirability of having newspapers zero-rated. Successive Ministers for Finance have said that it is not possible to zero-rate those newspapers. If there is some suggestion that it is possible but perhaps is not financially feasible in any particular year to do so, then that is news indeed. It would be important from the point of view of everyone on all sides of the House that we should once and for all clarify whether or not it is a question of financial resources being available or strictures being imposed from outside.

Mr. Reynolds

This is a new man, a new fellow. This is his first budget.

Mr. MacSharry

The point the Deputy is making is valid and refers to the earlier replies I have given on the same question. This is where the difference arises between what might be described by them as a marginal extension and a major extension. Again that is apart altogether from what I said in an earlier reply in relation to the money, £4.9 million for books and booklets, as against £27 million more for covering the other items under their amendment.

Mr. Boland

Apart from the financial aspect, which I can accept, you can get away with £4.9 million for books and booklets in one year as a marginal extension, but not with £27 million for newspapers. Perhaps there might even be some hope for the publishing industry on the basis that in a subsequent year, if newspapers under a certain number of pages and size were to be excluded, that might constitute only a further marginal extension; and in a subsequent year newspapers below a certain further number of pages and size could be excluded as a further marginal extension. Is the Minister now telling us that if this is done in a creeping way it is possible, whereas if done in one fell swoop it might attract the attention of the eagle eyes of the Berlaymont?

Mr. S. Brennan

We have been discussing this matter now for some time. It is genuinely difficult to take seriously the pleadings of the Opposition in regard to removing value-added tax from newspapers. I find it difficult that they do not remember that it is just six short weeks ago since they had an opportunity to do something about this. Not only did they not tackle it but they did not even tackle the removal of value-added tax from books. Therefore, I find it rather hollow that we should spend so long on this item when they in fact had the pen in their hands a very short time ago. I do not doubt that they would like to remove VAT from newspapers — I suppose we all would if the cash were available — but frankly I find it rather hollow and shabby, to say the least, that they were not able to find the wherewithal to tackle the school books issue.

An Leas-Cheann Comhairle

Would Deputy Brennan accept that his contribution might not help in dealing with the matter with the expedition I would wish. Can we now proceed to put Financial Resolution No.4. Is Financial Resolution No.4 agreed?

Question put and agreed to.