Vol. 518 No. 4
166 Mr. Noonan asked the Minister for Finance if it is feasible to introduce a scheme to rebate the VAT paid on new houses to the purchaser of the houses; the estimated loss to the Exchequer of such a scheme; and if he will make a statement on the matter. [11946/00]
The position is governed by EU VAT law with which Irish VAT law must comply. Under the EU sixth VAT directive member states may retain the zero rates they had in place on 1 January 1991, but they are prohibited from introducing new zero rates. A rebate scheme on the lines suggested by the Deputy would effectively be zero rating and be contrary to EU VAT Law. The approximate cost of the proposal by the Deputy based on an estimate of new housing and apartments constructed in 1999 is in the order of £550 million. Even if it was feasible, it is doubtful whether such a scheme would reduce house prices. Given current market circumstances, a market rebate would soon be capitalised through an increase in the house price level.
