Michael D'Arcy
Question:12 Mr. D'Arcy asked the Minister for Finance the amount of VAT unclaimed in respect of agricultural purchases in each of the years from 1997 to 1999. [6287/00]
Other Questions. - Tax Rebates.
As a general rule, persons who are not registered for VAT cannot claim a credit for the VAT paid on business inputs. As a group, unregistered farmers are compensated for the VAT paid by them on their farming inputs in accordance with a mechanism provided for in the EU Sixth VAT Directive. The scheme, which is essentially a simplification measure, provides for a set amount, known as the flat-rate refund or addition, which farmers add to their prices and retain when selling to VAT registered businesses, co-ops, meat factories etc. The VAT registered business, in turn, deducts the addition as a normal business input in its periodic VAT return.
The amount of the flat-rate for any year is arrived at by calculating the VAT payable on agricultural inputs as a percentage of agricultural sales for the preceding three years. The flat-rate addition for 2000 is 4.2%. The cost to the Exchequer of the flat rate is as follows: 1997, £98 million; 1998, £93 million and 1999, £103 million. Unregistered farmers who bear VAT on the construction of farm buildings, land drainage or reclamation for farming may obtain a VAT refund under the VAT (Refund of Tax) (No. 25) Order 1993. Unregistered farmers' VAT repayments were as follows: 1997, £33 million; 1998, £30 million and 1999, £21 million.
Is there a EU proposal to move certain farm inputs from a VAT regime to an excise basis, for environmental protection reasons, particularly the reduction of fertiliser use on the grounds that excise is not reclaimable, unlike VAT?
I will check with my Department but I am not aware of any proposals in that regard. I am aware of the continuing concern of the EU about environmental matters and the impact the item to which the Deputy referred has on the environment.