asked the Minister for Finance the areas in which the national contribution to the EC in 1988 will be £35 million lower than estimated for budget 1988; and if these savings will carry over into the 1989 contribution.
Written Answers. - National Contributions to EC.
79.
The saving on the estimate for Ireland's gross EC Budget contribution arises partly from changes in the composition of the revenue of the European Communities made at the European Council last February and partly because the total revenue demand arising from the EC Budget adopted for 1988 was less than expected at the time the EC Budget contribution estimate was fixed.
At the European Council last February, the overall level of revenue available to the European Communities was increased and the composition of this revenue was changed. Under the system in operation up to then the EC Budget contribution of each member state comprised customs duties, agricultural levies and a percentage of the VAT base. The new system is made up of customs duties, agricultural levies and 1.4 per cent of the VAT base, with the balance of revenue divided by reference to the share of a member state in Community GNP. The VAT base to be used will be limited to 55 per cent of GNP. Thus Ireland will be charged 1.4 per cent on a base of 55 per cent GNP rather than on the higher full VAT base. There is a saving of about £20 million as a result of the budget contribution being calculated under the new system as compared with the situation if the old system had remained in place. As regards the balance of the saving of £15 million, the 1988 EC Budget was not adopted until 1 June 1988 and it was further amended in July 1988 and the level of expenditure and revenue required in that Budget and thus the Irish contribution share were not finalised until then. The final amount proved to be less than anticipated when drawing up the 1988 estimate for the Irish contribution.
It is also estimated that there will be additional refunds of about £7.5 million arising from adjustments to the VAT element of Ireland's contribution for previous years and from the 10 per cent refund for collection costs of traditional own resources. This will increase non-tax revenue in 1988 by £7.5 million compared with what it would otherwise have been.
As the budget contribution for future years will be calculated on the new system of contribution, the saving arising from this change will be maintained.