asked the Minister for Finance if he will consider reducing to 3 per cent the rate of VAT on construction equipment in view of the fact that such equipment when hired is at present chargeable to VAT at the rate applicable to the purchase of such a machine which means that equipment which when purchased is chargeable to 35 per cent VAT is charged at 35 per cent VAT for hire purposes; and the approximate cost to the Exchequer in the current year of such a VAT reduction.
Written Answers. - VAT on Construction Equipment.
459.
It would not be feasible within the VAT system to provide that the rate of VAT to be applied to the supply and hire of particular items of equipment should be the same as that which would apply to the supply of services for which the goods in question might be used. In accordance with the Government's plan, Building on Reality, I am having the general VAT rate structure examined with a view to effecting a rationalisation of the system. Since it is not possible to establish the extent of the relief which would be necessary to give effect to the question, including consequential effects, an estimate of the cost is not available.