Dáil Éireann debate -
Tuesday, 28 Nov 1995

Vol. 458 No. 8

Written Answers. - Vat Relief Scheme.

Noel Dempsey

Question:

75 Mr. Dempsey asked the Minister for Finance if, in the context of the 1996 Budget, he will consider introducing a VAT relief scheme for educational equipment purchased by voluntary groups for schools similar to the scheme operated for health equipment. [17645/95]

Minister for Finance (Mr. Quinn)

Under section 20 of the VAT Act, I can make refund orders in respect of VAT borne by bodies who would not be entitled to recover the tax under the normal VAT rules. A number of such orders have been made over the years; the scheme to which the Deputy refers relates to specialised items of medical equipment costing in excess of £20,000 exclusive of VAT which are purchased for hospitals by means of voluntary subscription.

The question of introducing a similar scheme for equipment purchased for schools by voluntary fund raising efforts has been raised on a number of occasions in recent years but was ruled out as not being the most suitable mechanism for assisting schools. In the first place, in order to have any appreciable effect, a refund scheme would have to be of much wider application than the one for medical equipment which is restricted to expensive items in excess of £20,000. It would also be very difficult to confine it to schools alone. There would be understandable pressure to extend it to all educational establishments and, in fact, to the very wide range of voluntary fund raising activity in this country. As well as being costly in budgetary terms, any such wide ranging scheme would infringe the basic requirement of the EU VAT system that educational and voluntary bodies should bear VAT on their purchases.

There is also a fundamental practical difficulty with any VAT refund scheme for schools in that it would be extremely difficult to ensure that such a scheme would focus on those most in need — i.e. those towards whom the State must direct scarce resources. In practice, a targeted approach is best done through the expenditure side of the budget. In this connection, I would point out that the level of capitation grants to primary schools had been increased significantly in recent years from £28 per pupil in 1992 to the present grant level of £40 per pupil. Furthermore, special assistance for equipment, etc. is available for schools in disadvantaged areas.