Dáil Éireann debate -
Thursday, 23 Oct 2003

Vol. 573 No. 2

Written Answers. - Value Added Tax.

Emmet Stagg

Question:

66 Mr. Stagg asked the Tánaiste and Minister for Enterprise, Trade and Employment her views on the trade figures for the first half of 2003, which show a significant decline in exports on the same period in 2002; if an examination has been undertaken of the extent to which trade figures may have been distorted by a scam involving VAT on electrical goods; and if she will make a statement on the matter. [24501/03]

Tánaiste and Minister for Enterprise, Trade and Employment (Ms Harney):

Exports of merchandise goods in the first six months of this year totalled just under €40 billion, down 19% on the same period last year. Imports declined by 25% in the same period to €23.3 billion. This continues a trend which began in the second half of last year. Prior to that, and going against the global trend, Irish exports had continued to grow, albeit at a slower rate than in previous years.

Clearly, there are several factors influencing the figures. The global economic slowdown is a significant factor, particularly as it impacted strongly on the IT sector, which is responsible for a high proportion of Ireland's trade. The rise in the value of the euro is another factor, as is the closure of a number of export intensive companies in, for instance, the IT sector over the past 18 months.

A number of economic indicators have recently been published which suggest that the global economy is beginning to emerge from the slowdown. Our record in trading is good – last year, Ireland was the largest exporter in the world inper capita terms, according to the WTO – and notwithstanding the difficulties presented over the past year, I believe that Ireland, as an open economy with a highly globalised business base, is in a good position to take advantage of the upturn which will come.

In relation to the impact of VAT carousel fraud on the trade statistics, I am advised by the Revenue Commissioners that they have been in direct consultation with the Central Statistics Office since February of this year regarding the trade figures resulting from VAT carousel movements between the United Kingdom and Ireland. As a result the CSO has issued an interpretive note in its monthly publication for general guidance.

The Revenue Commissioners are satisfied that the actions taken to date in close co-operation with the other revenue and law enforcement authorities have been successful in significantly reducing the amount of this transnational fraudulent activity. The commissioners have assured me their VAT carousel unit will keep the situation under constant review.

Question No. 67 answered with Question No. 34.