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Dáil Éireann debate -
Wednesday, 18 Jun 1986

Vol. 368 No. 2

Ceisteanna — Questions. Oral Answers. - EC VAT Directive.

14.

asked the Minister for Finance the Government's position on the proposed EC 16th Directive on VAT and in particular Article 4 thereof; and if he will make a statement on the matter.

The revised proposals of the EC Commission for a 16th VAT Directive are currently under examination in my Department. Discussions have also been initiated with interested parties in industry. While I am aware of the implications of the proposals, pending completion of the necessary deliberations I am not in a position to state what our definitive stance on them will be.

Will the Minister agree that from a practical point of view the implementation of the proposed Directive will be unacceptable until there is harmonisation of VAT and duty rates within the Community? Will the Minister agree that if Article 4 is implemented it could have serious consequences for many sectors such as the motor industry and also for the Revenue? Will the Minister make the case to the Community that, until such time as we have harmonisation, the implementation of this Directive will cause damage to our economy?

I am sure the Deputy is aware that the harmonisation of rates will cause us problems——

I appreciate that.

—— in that we are one of only two countries in the EC that zero rates food. I do not necessarily see that as an immediate solution to any problem that might arise under the 16th Directive. The problem arises from the Schul case in the European Court which was concerned at possible double taxation of secondhand goods imported from one State to another. VAT was paid in the member state where the goods were bought as new and then paid again when the goods, secondhand, were imported into the second member state. I would not rule out the possibility of finding a solution to that problem other than on the basis of the 16th Directive in its present form. We would all wish to find a reasonable solution to that problem and thus we would be on the same lines in general, if not precisely, with the Commission. I hope that Irish participation in these discussion will be conductive towards finding a solution to the problem rather than simply resisting the proposal regardless of alternative methods of disposing of the issue.

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