Vol. 483 No. 3
185 Mrs. B. Moynihan-Cronin asked the Minister for Finance if he will remove VAT on all phosphate-free products in the forthcoming budget in view of the fact that currently phosphate free products are more than twice the price of the regular products and the removal of VAT will entice the consumer to purchase phosphate-free products, which will be for the betterment of the environment; and if he will make a statement on the matter. [20270/97]
I presume the Deputy is referring to phosphate-free detergents and similar products.
The position in this regard is governed by European VAT law, with which Irish VAT law must comply. Under the EU Sixth VAT Directive, member states may retain the zero rates that they had in place on 1 January 1991, but they are prohibited from introducing new zero rates. As phosphate-free products as such were not zero rated at that time, it is not now open to the Government to apply such a rate. Indeed, the introduction of new zero rates has been prohibited for some time.
As regards a reduced rate, goods and services to which reduced rating may apply are listed in the EU Sixth VAT Directive. In addition, items not listed, but which were at a reduced rate on 1 January 1991, may, if a member state so decides, be placed at a "parking rate", i.e. a rate not less than 12 per cent, for the duration of this transitional regime. As phosphate-free products are not listed in the directive as a reduced rated category, nor were they at a reduced rate here on 1 January 1991, the standard rate, currently 21 per cent, must be applied.
