Vol. 436 No. 1
7 Mr. Flanagan asked the Minister for Finance if, in view of the fact that voluntary hospice foundations throughout the State are liable for VAT on certain equipment and the valuable work of such associations on behalf of the terminally ill, he will exempt hospice foundations from VAT.
Hospitals and hospices are exempt from VAT under the terms of the Sixth EC VAT Directive which, in turn, governs our national VAT regime. In the medical area, exempt status applies whether the bodies involved are funded publicly or through voluntary efforts. Exemption means that, while these organisations have the advantage of not having to charge VAT on the services they provide, by the same token they cannot recover the VAT on the goods and services which they buy in the course of their activities, including the construction of facilities. Generally speaking, VAT is only recoverable by VAT-registered traders who operate in the course or furtherance of business.
However, under the VAT Act, I have the power to make refund orders to provide for a refund of tax, subject to whatever conditions may be considered necessary in relation to particular schemes. In fact, hospices may benefit under one such order, Refund Order No. 23, which gives a full refund of the VAT borne on high-cost medical equipment which is purchased by means of voluntary subscription.
I would point out that an extension of the refund mechanism to cover all hospice expenditure would have to apply, at the very least, to hospitals and to other similar organisations assisting the seriously ill or handicapped. In addition, it would give rise, quite understandably, to pressure to extend the concession to charities generally. The Deputy will appreciate that even if such a concession were confined to hospices and hospitals, the cost in terms of VAT foregone to the Exchequer would, quite simply, be prohibitive and could not be contemplated in current budgetary circumstances.
The Government fully acknowledges the valuable contribution that organisations such as the hospices make to society in general and I would point to the fact that many of them are in receipt of lottery and health board funding.
I thank the Minister for his reply. However, I cannot accept his contention. I put it to the Minister that it is both possible and practical for his Department to extend Refund Order No. 23 having regard to the non-profit making and non-commercial work of hospice foundations throughout the State. He could make an exception in this case on the basis of the specific and exceptional nature of the work undertaken by the hospice foundation which is not undertaken by any other voluntary group. This is work that should be carried out by the State but it is now being organised on a voluntary basis in every health board region. It would be quite easy for the Minister to give an exemption from value added tax in the circumstances.
I agree fully with Deputy Flanagan that the medical and hospital services provided by hospices are exceptional. Refund Order No. 23, as liberally applied, is of assistance to them but it does not cover buildings which is a major issue in at least three locations that I am aware of. If I were to change the VAT system in relation to hospices, I would have to take in many other organisations that have also made rep resentations to me and who are also undertaking work which would be undertaken by the State if it could afford to do so. I have endeavoured to assist all these agencies as fairly as I can. The criterion is that an item of equipment must be worth in excess of £20,000 to qualify for exemption from VAT. Less expensive items are ruled out. I will certainly see if there is anything more I can do in that area, although I am not sure I can deal with it in the way suggested by the Deputy. I assure the House that it does not give me much pleasure to take a hard line on hospices.
Hospice care is peculiar in that, although it is extremely expensive, it is available free of charge to anyone in the State who needs it. It is fundamentally unjust that a voluntary hospice group should face a VAT liability bill of the order of £215,000 in respect of a building. I ask the Minister to allow an exemption in these circumstances.
The Minister has caught people with the probate tax. He should let them die in comfort.
I will certainly look at the area of refund orders as Deputy Flanagan has asked. It is not possible to give a more general relief. If we were to isolate hospices, a better way to do that would be to target a particular institution and give a grant directly.
How much was paid to the Exchequer in 1992 in VAT on equipment for hospices? Given that the Government does not pay for the necessary care for terminally ill patients, will it review the situation and admit that what it is doing is taxing those who provide this service voluntarily?
The Deputy is asking a specific question worthy of a separate question.
I think I have answered that. I will try to do something in relation to equipment but it is not possible to give a general exemption.
Can the Minister tell us what it would cost to give this exemption?
I do not have that figure. The Deputy will have to accept that there is no way we can exempt hospices only. Organisations dealing with the handicapped are in the same position. They do not charge VAT on any service so they cannot reclaim VAT. There are many other organisations in that position, for example, groups working with people who suffer from multiple sclerosis, cerebral palsy etc. An exemption for one would have to mean an exemption for all, which would be very expensive.
I welcome the Minister's indication that he will look at that area once again. As chairman of a hospice I can fully understand the question raised by Deputy Flanagan. The equipment for this area of care is expensive and I ask the Minister to consider allocating money for the specific area of hospice care which deals with the terminally ill. Last week £3,000 was paid for a pegasus mattress, which was required for the terminally ill. The area of hospice care is a specific one and I am pleased the Minister will consider it as such.
