Vol. 486 No. 1
88 Dr. Upton asked the Minister for Finance if he reviewed the situation in relation to VAT on newspapers; the action, if any, he proposes to take in relation to the matter; and if he will make a statement on the matter. [1933/98]
I can confirm that the VAT treatment of newspapers was reviewed in the context of the budget.
The position is that newspapers and other general interest periodicals are taxed at the reduced rate of 12.5 per cent. I have no plans to reduce that rate. While it would be legally possible under EU VAT law to apply a rate as low as 5 per cent to newspapers, the cost of such a concession would be about £15 million per annum. Furthermore, it would involve the creation of a new lower reduced rate. Inevitably, there would be calls from a number of other sectors which could potentially benefit under EU rules to be put at the lower rate. The cost of a widely based concession would be very substantial.
I am aware of the competition faced by Irish newspapers from UK publications. I would agree that UK produced publications may have advantages of economies of scale and lower production costs. However, I would point out that all newspapers sold here attract VAT at the 12.5 per cent rate. Accordingly, I do not accept that there is any VAT based distortion of competition in the sector. In any event, a VAT concession would have to apply to both Irish and UK published newspapers and therefore would not improve the competitive position of the Irish newspaper industry.
