asked the Minister for Finance if his attention has been drawn to assertions that the oil companies, who are engaged in the business of distributing free gifts, usually electrical appliances, do not pay VAT for their goods, thus avoiding a liability of approximately £10 million per year; the proposals, if any, he has to bring about any change in this situation, in view of the fact that all other people engaged in the electrical industry are obliged to pay VAT; and if he will make a statement on the matter.
Ceisteanna—Questions. Oral Answers. - Business Gifts Tax.
7.
Under VAT law there is no liability to tax on business gifts generally where the cost to the donor of each gift does not exceed £15, exclusive of VAT. The limit of £15 which was fixed in 1979 was raised administratively in 1986 to £30 in order to take account of inflation. Gift schemes operated by the oil companies have been treated by the Revenue Commissioners as qualifying for this relief.
I am not in a position to estimate the amount of VAT foregone through the relief. To the extent that such gifts are in fact paid for by the customer in the form of higher retail prices for petroleum products additional VAT would be paid by the oil companies thereby reducing significantly the VAT foregone. As the Deputy will be aware my colleague the Minister for Industry and Commerce has recently taken action to stop the price of petrol being kept higher than it should be in order to pay for such schemes.
Does the Minister accept that there is an enormous anomaly in this case and that the oil companies are, in effect, indirectly selling these goods in direct competition with electrical trades where thousands of jobs are being lost because of unfair competition? Will the Minister look again at the loophole in the legislation which allows these companies to sell on goods without having to pay VAT in direct competition with the electrical trades who are suffering enormously?
As I said in my reply, the limit of £15 was increased to £30 last year by the previous Government. In my view the issue in regard to oil companies is largely academic as most of them have dismantled their gift schemes or will do so shortly since my colleague, the Minister of Industry and Commerce, took action. The position is that Esso, Shell and Jet have discontinued their schemes and BP (Ireland) will do so at the end of December. Texaco, Burmah and Maxol are to continue until the end of the year and their plans thereafter are uncertain. It seems obvious that as far as the oil companies are concerned the action by my colleague, the Minister for Industry and Commerce, has eliminated the problem correctly described by the Deputy.
I am pleased to note that the Minister agrees with my statement because we are concerned to protect jobs in the electrical industry. Does the Minister accept that some oil companies have not foregone the gift schemes and that one of them has produced posters declaring that they are sticking with the gifts? The problem is not going away.
Some of the companies will continue with the gifts until the end of the year.
Will the Minister keep the matter under review?