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Dáil Éireann debate -
Tuesday, 12 Dec 1989

Vol. 394 No. 4

Written Answers. - Reduction in VAT Rates.


asked the Minister for Finance if, in the budget, he intends to treat the agricultural industry in like manner as the manufacturing industry, whereby profits reinvested in the industry will be taxed at 10 per cent; and if he will make a statement on the matter.

I have no plans to extend the 10 per cent rate to agriculture.

The 10 per cent rate is a special rate, introduced in 1980, in substitution for export sales relief that previously applied to manufacturing for export, as part of the policy of attracting mobile international investment. Requests from farming organisations to have this tax régime extended to farming have been made at various times over the past nine years to successive Ministers for Finance, and these have always been refused. If the régime were extended to farming, there would be strong pressures to have it extended to other sectors as well, which have also been refused this rate in the past. In any case, the 10 per cent rate applies only to certain companies, and not to individuals. The vast majority of farmers are unincorporated, and are subject to income tax rather than corporation tax.


asked the Minister for Finance, in view of the fact that VAT was reduced from 25 per cent of 10 per cent on the importation of fine arts recently, the way in which he can justify VAT of 25 per cent on school books, pencils and erasers in primary schools.

School books, in common with books generally, are in fact zero rated for VAT. Pencils and erasers are liable at the standard rate of 25 per cent which applies to the bulk of consumer goods. It is not considered that this represents an undue burden in terms of education related expenditure generally.

The VAT rate on works of art and certain antiques, was reduced from 25 per cent to 10 per cent in this year's budget in response to the widespread concern expressed in many sectors of the community about the outflow of such items from Ireland and the consequent depletion of the national heritage. It is to be hoped that, over time, the reduction will encourage the retention of cultural artifacts in Ireland and also their reimportation.