Dáil Éireann debate -
Tuesday, 21 Oct 1997

Vol. 481 No. 7

Written Answers. - VAT Rates.

Bernard Allen

Question:

169 Mr. Allen asked the Minister for Finance the steps, if any, he has taken to support the continuation of the existing reduced rate of VAT applicable to labour intensive industries such as tourism; and the steps, if any, which are being taken to ensure that the reduced rate will continue after 1999. [16924/97]

Minister for Finance (Mr. McCreevy)

The position is that, in Ireland, labour intensive services generally, including hotel and holiday accommodation, restaurant services and commercial sporting facilities are taxed at the reduced VAT rate of 12.5 per cent.

In Partnership 2000, the Government confirmed its intention, subject to EU requirements and overall budgetary constraints, to maintain thestatus quo in relation to VAT for labour intensive services and construction over the medium term. Moreover, there is also a commitment that the Government will be pressing in the EU's review of the VAT regime for the option to maintain the current position of labour intensive services and construction in whatever common EU VAT system may emerge. These commitments repeat similar ones given in previous national agreements with the social partners.

The EU review in question is likely to take place over the next several years in the context of a series of proposals, which the European Commission plans to present in accordance with its work programme on the matter. The formal proposals in relation to essentials of the common system and the relevant rating rules have yet to be tabled by the European Commission. The Government will consider these proposals when they emerge on their merits and having regard to the national interest.