asked the Minister for Finance if he will estimate the revenue yield if foodstuffs were VAT-rated at (i) 5 per cent and (ii) 10 per cent; and (a) the amount of this yield which would be absorbed in making compensatory increases of social welfare payments of various kinds to persons now below the income tax threshold, and (b) the reliefs which could be then afforded, by applying the remainder of that yield to reduction of income taxation, either in terms of raising the tax threshold, or in some other terms which he may find more convenient.
Ceisteanna — Questions. Oral Answers. - VAT Rating of Foodstuffs.
15.
It is currently estimated that the respective full year gains from applying VAT at 5 and 10 per cent to foodstuffs, which is taken to mean zerorated food and drink for human consumption, are £98 million and £196 million. Compensatory increases in weekly welfare payment levels, if they were made, would cost approximately £20 million and £40 million respectively in a full year, leaving net Exchequer gains of £78 million and £156 million. If these latter sums were applied to the reduction of income taxation it would be possible to increase the personal allowance by £150 and £300 respectively or to increase the general exemption limits by £1,015 single, £2,030 married and £1,450 single, £2,900 married, respectively.