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Dáil Éireann debate -
Thursday, 5 Nov 1992

Vol. 424 No. 10

Ceisteanna — Questions. Written Answers. - VAT and Excise Duties.

Charles Flanagan

Question:

13 Mr. Flanagan asked the Minister for Finance if he will give details of the agreement which was reached at the recent EC Council of Ministers meeting in respect of VAT rates and excise duties; and the range of products to which these rates will apply; the implications, if any, these rates will have for Exchequer finances in 1993; and if he will make a statement on the matter.

At their meeting on 19 October last, the EC Council of Economic and Finance Ministers adopted a package of eight Directives setting out the rating and structures arrangements for VAT and excise duties when the Single Market comes into being.

The main VAT rating arrangements approved for the Community were:

—a standard rate of not less than 15 per cent;

—the option of one or two rates below this standard rate, with a minimum of 5 per cent, for a restricted list of goods and services, as shown in Table 1; and

—the possibility of retaining at least for a transitional period extra low rates, including zero rating, in areas where such rates currently apply.

With regard to excise duties, the Council decided that only hydrocarbon oils, and alcoholic and tobacco products will be subject to common Community rules. The Directives recently adopted set out the common rules as regards the coverage of products and exemptions which member states may apply. The No. 2 Finance Bill will transpose the agreed measures into national law; in general, there will be little practical effect as compared with the existing situation in these areas. As for rates of excise duty, a minimum rates regime will apply: the minima agreed for the main product categories are set out in Table II.
Subject to observing these general Community requirements, final decisions on the actual rates to apply remain the prerogative of individual member states. The level and scope of VAT rates, both standard and reduced, and of excise duties is a matter for the normal budgetary process and I will be examining this matter in the context of the 1993 budget. The House will appreciate that such decisions cannot be taken in isolation from wider issues of tax policy or without taking cognisance of rates prevailing in competing member states. Clearly, I must have regard to the cost implications of the total approximation package against the background of overall budgetary requirements. For these reasons, I am not in a position at this stage to indicate the actual rates that will apply next year.
TABLE I
List of supplies of goods and services which may be subject to reduced rates of VAT

Category

Description

1

Foodstuffs (including beverages but excluding alcohlic beverages) for human and animal consumption; live animals, seeds, plants and ingredi ents normally intended for use in preparation of foodstuffs; products normally intended to be used to sup plement or substitute foodstuffs.

2

Water supplies.

3

Pharmaceutical products of a kind normally used for health care, pre vention of diseases and treatment for medical and veterinary purposes, including products used for con traception and sanitary protection.

4

Medical equipment, aids and other appliances normally intended to alleviate or treat disability, for the exclusive personal use of the dis abled, including the repair of such goods, and children's car seats.

5

Transport of passengers and their accompanying luggge.

6

Supply, including on loan by librar ies, of books (including brochures, leaflets and similar printed matter, children's picture, drawing or colouring books, music printed or in manuscript, maps and hydrographic or similar charts), newspapers and periodicals, other than material wholly or substantially devoted to advertising matter.

7

Admissions to shows, theatres, cir cuses, fairs, amusement parks, con certs, museums, zoos, cinemas, exhibitions and similar cultural events and facilities.

Reception of broadcasting services.

8

Services supplied by or royalties due to writers, composers and per forming arists.

9

Supply, construction, renovation and alteration of housing provided as part of a social policy.

10

Supplies of goods and services of a kind normally intended for use in agricultural production but exclud ing capital goods such as machinery or buildings.

11

Accommodation provided by hotels and similar establishments including the provision of holiday accom modation and the letting of camping sites and caravan parks.

12

Admission to sporting events.

13

Use of sporting facilities.

14

Supply of goods and services by organizations recognized as charities by member states and engaged in welfare or social security work, inso far as these supplies are not exempt under Article 13.

15

Services supplied by undertakers and cremation services, together with the supply of goods related thereto.

TABLE II
EC Minimum Rates of Excise Duty

Product

Minimum Rate of Duty

Tobacco Products

Cigarettes:

57% of the retail price of the most popular price category;

Cigars/cigarillos:

5% of the retail price or 7 ECU per 1,000, or per kg.

Fine-cut smoking tob- acco intended for the rolling of cigarettes:

30% of the retail price or 20 ECU per kg.

Other Smoking tob- accco:

20% of the retail price or 15 ECU per kg.

Alcoholic Drinks

Wine (Still and Spark- ling):

0 ECU per hectolitre;

Beer:

0.748 ECU per hectolitre/degree Plato or 1.87 ECU per hectolitre/degree of alcohol of finished product.

Spirits:

550 ECU per hectolitre of pure alcohol for member states below this rate; 1,000 ECU per hectolitre of pure alcohol for member states above this rate; member states with rates between 550 and 1,000 ECU per hec tolitre of pure alcohol may not reduce their rates.

Intermediate Products: (Port, Sherry etc).

45 ECU per hectolitre

Hydrocarbon OilsPetrol —Leaded:

337 ECU per 1,000 litres

—Unleaded:

287 ECU per 1,000 litres

Road diesel:

245 ECU per 1,000 litres

Auto — LPG:

100 ECU per 1,000 kg.

Heating Fuels

—gas diesel;

18 ECU per 1,000 litres

—Kerosene:

0 ECU per 1,000 litres

—LPG:

0 ECU per 1,000 kg.

Heavy Fuel Oil:

13 ECU per 1,000 kg.

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