I move Financial Resolution No. 1:
(1) THAT in this Resolution—
"the Principal Act" means the Value-Added Tax Act, 1972 (No. 22 of 1972);
"the Act of 1998" means the Finance Act, 1998 (No. 3 of 1998).
(2) THAT the rate of value-added tax on the supply of livestock and live greyhounds and the hire of horses be increased from 3.6 per cent. to 4 per cent. of the taxable amount or value of such goods and services, and that, accordingly, the Principal Act be amended in subsection (1) (inserted by the Finance Act, 1992 (No. 9 of 1992)) of section 11 by the substitution in paragraph (f) of “4 per cent.” for “3.6 per cent.” (inserted by the Act of 1998).
(3) THAT the rate of flat-rate addition to prices of agricultural produce or agricultural services supplied by unregistered farmers be increased from 3.6 per cent. to 4 per cent., and that, accordingly, section 12A (inserted by the Value-Added Tax (Amendment) Act, 1978 (No. 34 of 1978)) of the Principal Act be amended by the substitution in subsection (1) of "4 per cent." for "3.6 per cent." (inserted by the Act of 1998).
(4) THAT this Resolution shall have effect as on and from the 1st day of March, 1999.
(5) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1927 (No. 7 of 1927).
This resolution provides an increase from 3.6 per cent to 4 per cent in the level of the flat rate farmers' refund together with a similar change in the VAT rate on livestock, live greyhounds and the hire of horses.
The flat rate scheme is a simplified and practical method of applying value added tax to farming. It compensates unregistered farmers on an overall basis for the VAT charged to them on their purchases of goods and services. This is achieved without applying the normal VAT rules on registration, record keeping and returns.
The amount of the flat rate is arrived at by calculating the VAT payable on agricultural inputs as a percentage of agricultural sales. The Revenue Commissioners have calculated on the basis of macro-economic data for the past three years that a flat rate of 4 per cent is now needed to achieve full compensation.
Traditionally the VAT rate on all livestock has been retained at the same level as the flat rate addition. This is administratively more convenient for farmers and their customers. These changes will have effect from 1 March 1999 and are worth £10.76 million in a full year.