Ceisteanna-Questions. Oral Answers. - Indirect Tax Harmonisation.

Proinsias De Rossa

Question:

24 Proinsias De Rossa asked the Minister for Finance the progress, if any, which has been made on proposals for harmonisation of tax and excise duties during the period of Ireland's Presidency of the EC and in ensuring that the special difficulties of Ireland in this regard are recognised; and if he will make a statement on the matter.

The framework agreement which was put in place at the end of last year under the French Presidency on indirect tax harmonisation does not envisage decisions until 1991 on the major issues. Nevertheless, in the course of the Irish Presidency we have made useful progress in preparing the way for the decisions to be taken on a number of topics including the scope of the reduced VAT rate; and the harmonised rates of excise to apply to alcohol, tobacco and mineral oils. Because of the sensitive budgetary and economic implications for all countries, progress on these issues is difficult. However, the groundwork is being laid for resolution of the outstanding issues within the agreed timetable.

In order to facilitate advance planning by both businesses and tax administrations, I have been pressing the Commission to bring forward its proposals for the VAT control arrangements to apply to imports and exports of goods when frontier controls are removed. While the production of the proposals took longer than expected, they were formally unveiled by the Commission at the meeting of Finance Ministers which I chaired in Luxembourg on 11 June. We will be initiating a detailed examination of the proposals by experts later this week with a view to progressing them before handing over to our Italian colleagues.

Deputies will be aware that at that meeting of the Council of Ministers on 11 June the Irish Presidency achieved a major success in securing the agreement of the Council for a package of three corporation tax measures aimed at encouraging co-operation between companies in different member states. The package had been under discussion among member states for some 21 years. This is recognised as a very substantial success for the Presidency and the Community in the run-up to 1992.

Finally, in regard to the budgetary difficulties posed for Ireland by indirect tax approximation, the study being undertaken by the EC Commission at my initiative is now well under way. The study will examine and report on measures to facilitate our full participation in the process of completing the internal market. It is hoped that the study will be completed shortly.

Can I take it from the Minister's reply that it is highly unlikely that the harmonisation of VAT and excise duties will take place by the end of 1992 and that it will not be in place for the target date of the end of 1992?

I do not think the Deputy or anybody else could make that assumption. It has been decided among all the Twelve member states that final decisions on VAT and customs and excise will be made by the end of 1991. That is what the agreement states. That does not rule out agreement on many aspects of it as we move towards the end of 1991. At present the Commission's proposals on VAT and the repercussions of removing the fiscal frontiers are on the table and are being examined.Agreement on excise duties is still awaited from the Commission. Apart from that we have been behind the scenes carrying out a lot of study and discussions with the member states on the classification and into what rate they will fall in relation to VAT and excise. A lot of groundwork is being done which is not noticeable at this stage.

Unless I am misunderstanding the Minister what he is telling the House is that various proposals will be arrived at by the end of 1991. That is not a statement to the effect that there will be harmonisation of all EC member states on tax, VAT and excise duties by the end of 1992. Is the Minister seriously saying we will have harmonisation of both VAT and excise duties by the end of 1992? In effect what impact will that have on the revenues of the State?

The objectives of the single market are to achieve tax harmonisation and remove the fiscal frontiers by the end of 1992. The position in relation to the effect that it will have on our budgetary position is being studied by the Commission with the agreement of all the members of the Council. That study and its results should be available shortly. At present the figure still stands at approximately £600 million as the cost to the Irish Exchequer, based on moving our VAT rates towards the UK rates— which stand at the standard rate of 15 per cent at present — taking a view on what excise duties might be in relation to the broad number of items, because excise duty is as important to the Irish Exchequer as VAT.

(Limerick East): May I ask the Minister for Finance if the question of harmonisation is being confined now to excise and VAT or are there proposals on DIRT tax and is there a possibility of proposals on the harmonisation of corporation tax?

The position in relation to DIRT tax is, as I am sure the Deputy is aware, that the German Government abolished it. The DIRT tax proposal of the Community is still formally on the table and discussions will resurface at some stage in the future. The likelihood of a DIRT tax proposal being agreed in the very near future — because it must be unanimous — is remote. In relation to corporation tax my view is that the Commission are not proceeding with that at present.

(Limerick East): Would the Minister agree that it would be impossible to remove exchange controls completely and that there cannot be free movement of capital in Europe while DIRT tax remains at varying levels?

As the Deputy is aware all the major countries have moved towards capital liberalisation. The Italians have moved ahead of time. Agreement is there among all the member states to move towards capital liberalisation and the question of DIRT tax is still being considered. I could not anticipate what agreement they may finally come to at the end of the day. I have given the Deputy all the information that is available so far.

That disposes of questions for today.

I had a Private Notice Question down today——

On a point of order, it is customary that the Order of Business is circulated before the Taoiseach stands to deliver it. The Whip of the Labour Party tried to get the Order of Business within the last five minutes from the Whip's office. We were informed it was not available.The business for this week was agreed on Thursday or Friday of last week. May I ask the Taoiseach is there any particular reason the Order of Business is not circulated before he stands up to announce it?

I should say The Workers' Party is in much the same position.

When we come to the Order of Business I will explain the position. The Chief Whip assures me that the Order of Business was circulated 15 minutes ago.

I am sorry, the Whip, Deputy Howlin of the Labour Party, contacted the Whip's office within the last five minutes asking for the Order of Business as is customary and was told it was not available, that it would not be available until the Taoiseach stands up in this House. That is far from satisfactory.

That is totally incorrect.

That is not so.

I am calling Deputy Barry.

In relation to the same point, efforts were made by my office also to contact the Whip's office to get the Order of Business. We were told we would have it shortly — that was at 3.30 p.m. I have just been handed the Order of Business now. It is only being circulated now.

Deputy Barry, was offering.

I had a Private Notice Question down today regarding the Verolme Dockyard which you refused on the basis that a similar question had been answered on 6 June. I have since looked that up and I see that the information given by the Minister for Finance on 6 June is at total variance with the comments being made by Government "spokesmen" over the weekend regarding the dockyard, so I would like to raise the matter on the Adjournment.

I will be in touch with the Deputy concerning that matter.

I would like to ask the Minister for Justice to outline the circumstances in which a request from the West German authorities for the extradition of one Donna Maguire was refused last year and if he would make a statement on the matter?

The matter has been ruled out of order. I have conveyed that message to the Deputy.

I am aware of your ruling.

Perhaps the Deputy would like to raise it on the Adjournment.

I was coming to that.

The Chair has not as yet dealt with the Order of Business.Let us do things in proper order.

I believe that the Government deliberately refrained from the extradition request entirely on spurious grounds and on that basis I wish——

The Deputy should raise that matter in the proper fashion.

Since you have refused to allow me to ask those questions I am seeking to have the matter raised on the Adjournment of this House this evening.

I posed that question to the Deputy earlier.

I too had a Private Notice Question and I seek to share the Deputies time on the Adjournment to raise it.

Fine, Deputy McCartan, I will be in touch with the Deputies. Let us deal with the Order of Business.