Ireland's system of indirect taxation is already grounded in EU law both in relation to excise duties and value added tax. The EU rules were agreed in the run up to the 1993 Single Market. There is no necessary connection between the introduction of a single currency and the EU rules on indirect taxation.
With regard to excise duties, there are definitive harmonised EU rules for production, holding and movement of excisable goods in the Community. These rules specifically relate to tobacco, hydrocarbons and alcholic drinks. There are also EU harmonised rules governing the structure of excise duties on these products and the minimum rates which member states must apply. The Irish excise duties regime operates satisfactorily within the framework set by these EU rules, which allows member states to set their own rates of duty provided that they respect the minimum rate.
As regards value-added tax, the entire system, including the rating structure, is governed by EU VAT law. The main legal instrument is the Sixth VAT Directive.
The rules on VAT rating were agreed at European level in the run up to the 1993 Single Market. The main features are as follows: a single standard rate of at least 15 per cent applicable to most goods and services; the option of applying one or two reduced rates (subject to a minimum of 5 per cent) to certain specified goods and services (we have one reduced rate of 12.5 per cent); application of a reduced rate for restaurant meals and housing if member states applied such a rate to these items on 1 January 1991 — we are availing of this facility; application of a "parking rate" of at least 12 per cent to goods and services which were at a reduced rate on 1 January 1991 but which are not on the reduced rate list. This is a transitional measure only: these goods and services are ultimately destined to be standard rated — we availed of this facility for certain labour intensive services; retention on a transitional basis of existing zero-rates and super-reduced rates, such as our special livestock rate.