Dáil Éireann debate -
Wednesday, 28 Oct 1992

Vol. 424 No. 5

Written Answers. - Confectionery Products.

Ruairí Quinn

Question:

53 Mr. Quinn asked the Minister for Finance the steps, if any, he proposes to take to harmonise the situation between Ireland, Northern Ireland and the UK, in respect of the exemption of confectionery products in Northern Ireland and the UK from VAT as against the present situation in Ireland where they are VAT rated at 21 per cent; the level of confectionery imports into Ireland as a result of this massive price discrepancy; and if he will make a statement on the matter.

Minister for Finance (Mr. B. Ahern)

The harmonisation of VAT rates on confectionery products in this country with those applying in the UK and Northern Ireland would involve the extension of the zero VAT rate to flour confectionery, i.e. cakes and buns, frozen desserts and biscuits other than chocolate biscuits. These products are currently standardrated here. Application of the zero rate would give rise to a very substantial loss in revenue and, accordingly, consideration of any such measure can only be carried out in the context of the normal budgetary process. As the Deputy knows, it would not be appropriate for me to detail my budgetary plans at this stage.

The same rate of VAT applies to all confectionery sold in this country, irrespective of origin. Thus the VAT treatment is of no relevance to purchasing patterns at trade level; this will reflect consumer preference and relative cost competitiveness at the production level. While private consumers may make purchases of confectionery in the context of general cross-border shopping trips, it is not possible to quantify these since they come with in the scope of the general travellers' allowances regime. It is not considered, however, that this has any significant adverse effects on the domestic market for confectionery products.