Vol. 565 No. 4
69 Ms Shortall asked the Minister for Finance if he will give consideration to reducing the 21% VAT rate on condoms in view of the high rate of unplanned pregnancy and in order to ensure that contraceptives are more affordable; and if he will make a statement on the matter. [11252/03]
The standard rate of 21% applies to non-oral medicines, e.g. injections, ointments, as well as items such as incontinence pads, condoms, bandages and syringes. Under EU VAT law, with which Irish law must comply, it is not possible to introduce new zero rates of VAT, as we can only retain the zero rating that was in existence on 1 January 1991. This applies for the most part to food, oral medicines, books, children's clothes and shoes.
Member states are permitted however to have up to two reduced rates of not less than 5% for a specified number of goods or services set out in annex H of the EU Sixth VAT Directive. Pharmaceutical products of a kind normally used in health care, prevention of diseases and treatment for medical and veterinary purposes, including products used for contraception and sanitary protection are included in Annex H. It would, therefore, be possible to have a reduced rate of VAT applying to such products, either our existing reduced rate of 13.5% or, if a second reduced rate was introduced, a minimum rate of 5%.
Reducing the VAT rate on all non-oral medicines including condoms to 13.5% or 5% would cost the Exchequer €17.2 million or €36.7 million respectively in a full year. In addition, the introduction of a second reduced rate would increase pressure to introduce reduced rates for goods and services which are covered by Annex H of the Sixth VAT Directive. This could have significant consequences for Exchequer revenue from these sources. In any event, if there was a reduction in the rate of VAT applying to non-oral medicines including condoms, I am not convinced that any rate reduction would be necessarily reflected in retail prices for condoms or other non-oral medicines. Moreover, there are other factors at work which determine the level of pregnancies, planned or unplanned. A VAT rate change would not, therefore, necessarily help the objectives set out by the Deputy.
