Michael McDowell
Question:68 Mr. M. McDowell asked the Minister for Finance the estimated loss of revenue to the Exchequer in 1995 by reducing the VAT rate on Irish newspapers to 5 per cent; and if he will make a statement on the matter.- [7505/95]
Written Answers. - VAT on Newspapers.
It is not permissible under EU law to apply a lower rate of VAT to Irish newspapers than applies to newspapers published in other member states and sold in this country. Accordingly, any reduction in the rate of VAT would have to apply to all newspapers sold here.
The loss to the Exchequer in 1995 of reducing the rate of VAT on newspapers to 5 per cent would depend on the date of implementation of the change. If the 5 per cent rate applied from 1 July 1995, the loss is estimated at £4.1 million; if the change were to take effect from 1 September, the loss would be of the order of £1.9 million. The full year cost of a 5 per cent rate on newspapers is estimated at £13.7 million. It must be borne in mind that the creation of a 5 per cent rate specially for newspapers inevitably would give rise to immediate pressure from other sectors to be allowed the benefit of that rate which, if conceded, would increase the cost even further.
The Deputy will recall that, in reply to his previous Parliamentary Question in this area on 5 April 1995 — columns 1312-1314 — I indicated that a reduction in the VAT rate here would not solve the problem for Irish newspapers in regard to the competition they face from UK publications, which derives from non-tax factors.