I welcome the Minister of State, Deputy Perry, to the Chamber. The first matter is in the name of Senator Whelan.
Adjournment Matters
Court Accommodation Refurbishment
I thank the Minister of State for taking this matter which pertains to the location and suitability of Portlaoise Courthouse. It was built in 1782. While I am all for historic buildings to be put to good use and good purpose, in terms of having a viable, modern courthouse, this building is well past its sell-by date. Its location in the context of modern Ireland is absurd. It is on the main street of Portlaoise, which would be tantamount to having a courthouse in the middle of Grafton Street in Dublin. It is not fair on business or on the Courts Service and the people who work there. The Prison Service has a serious problem with it in terms of security, parking and safety, as do the Garda authorities. All the stakeholders would like to see the courthouse relocated and reappointed to a purpose-built building that would be more appropriate to its use.
Another factor is that the courthouse used to be the companion building to the former Marlborough jail which was closed in 1830. The courthouse was in that kind of use dating back to that time. In 1982, a colleague of the Minister of State, Councillor Tom Keenan of Fine Gael, had the foresight to relocate the civic offices, the Laois County Council offices, from the courthouse building to a new modern purpose built complex in county hall. The relocation of Portlaoise courthouse is long overdue, bearing in mind that it no longer only runs the business of court in Portlaoise due to rationalisation of the Courts Service.
I am opposed not to the rationalisation of the Courts Service but to the closure of small rural courthouses such as those in Birr and Edenderry. As a journalist, I covered proceedings in the courthouses in Abbeyleix, Mountmellick, Portarlington and Rathdowney. All of these courthouses have since been amalgamated and centralised in Portlaoise which also houses the Circuit Court. Because of its close location to two high security prisons, there are often high profile cases in Portlaoise courthouse. When this happens, the entire main street is blocked with Garda and prison vehicles and people attending the courts by whom senior citizens and other people going about their business often feel intimidated. The situation is no longer tenable. I urge the Minister of State, Deputy Perry, to impression upon the Minister for Justice and Equality, Deputy Shatter, the need for investment by the Courts Service in a modern courthouse in Portlaoise, in a building which is fit for purpose and not located on the Main Street of the town. The current situation is absurd.
On behalf of the Minister for Justice and Equality, I thank the Senator for raising the matter. I appreciate his interest in Portlaoise courthouse and the issues relating to its existing location on the Main Street in Portlaoise.
As the Senator will appreciate, under the provisions of the Courts Service Act 1998, management of the courts is the responsibility of the Courts Service and the Minister has no role in the matter. Section 4(3) of the 1998 Act provides that the Courts Service is independent in the performance of its functions which, of course, include the provision, maintenance and management of court buildings. However, the Minister has had inquiries made and the Courts Service has advised that Portlaoise courthouse is a neoclassical building constructed around 1805 on a corner site. The courthouse is owned by Laois County Council and was last refurbished by the Courts Service in 2001 at a cost of €2.75 million.
More recently, in 2010, some minor works were also carried out. In relation to proposed works, the service has stated that some work is also planned for the provision of cell facilities within the courthouse. The service has stated that it is aware that the facilities in Portlaoise courthouse fall short of what is required to meet the demands placed on the courthouse but that there is limited scope for development within the existing courthouse building and site. In 2007, the service in co-operation with the OPW, began a search for an appropriate alternative site in the town for a new courthouse development. A number of potential sites were considered during 2007 and 2008. However, no site was acquired at that time.
Since 2008, the service, in common with all other public service organisations, has been operating in a very difficult and challenging economic environment. While continuing its search for a new site for a courthouse, the service has indicated that it currently has limited funding available for site acquisition and development. In the absence of a suitable site, the service has informed the Minister that it is not possible to bring forward specific proposals for the replacement of Portlaoise courthouse at this time and that a new courthouse cannot be delivered in the short to medium term.
I appreciate the frankness and directness of the response. It is, however, bad news as far as I am concerned. I believe refurbishment of Portlaoise courthouse, which is hundreds of years old, was a waste of money and a case of throwing good money after bad. It suggests to me that the problem is being long-fingered and will not be addressed in the short term. I am further concerned to hear that cell facilities are to be provided at the courthouse. While this may resolve some of the security issues it will not resolve the core issue of the relocation of the courthouse. If the Courts Service needs assistance in securing and sourcing a suitable site I am sure many of the local businesses would be willing to assist it in that regard. While I realise that resources are limited, this issue will have to be revisited as a matter of priority. The holding of a court sitting almost every day of the week at the courthouse on Main Street cannot be allowed to continue.
It mesmerizes me in the extreme that the previous Government spent €30 million on a site for the proposed Thornton Hall prison, which will never be built. A number of sites in respect of the relocation of Portlaoise courthouse could have been purchased with that money, which was taxpayers' money that has been squandered. I ask that the Minister of State, Deputy Perry, impress upon the Minister for Justice and Equality, Deputy Shatter, my ongoing concern in this relation to this matter.
The Government is conscious of the value of providing for an excellent court system and has continued to provide substantial resources to the service, with a supplementary estimate of €5 million provided last year on top of the original net budget of €54.1 million. However, the Senator will appreciate that no area is exempt from the financial constraints of the past few years.
In relation to some court locations, the board has had to take the unpalatable decision of closing a number of small, non-viable venues and has had to introduce more efficient work processes to allow the service to continue to provide front-line services within the reduced staffing levels that are essential nowadays. The service has stated that it will keep the issue of Portlaoise courthouse under review. Given the Senator has had meaningful dialogue on the issue with the Courts Service I am sure it is conscious of the needs in this regard.
Data Protection
I welcome the Minister of State to the House.
I am aware that an informal meeting of Ministers for Justice and Home Affairs will be taking place at the end of next week in Vilnius and understand that the general data protection regulation is the agenda of that meeting.
I have been contacted by a number of people in the genealogical community who are concerned that the European Commission plans to unify data protection within the European Union with a single law, the general data protection regulation, which may have unintended consequences. I have specifically been contacted by Michael Merrigan, general secretary of the Genealogical Society of Ireland who, in turn, has been contacted by the Genealogical Society of Finland. I thank them for the information with which they have provided me.
I have a keen interest in researching my family history and have first-hand experience of accessing resources through my research. I realise the sensitivity of some data and so understand that we need to protect privacy. We have all welcomed the renewed focus on genealogy due to events surrounding The Gathering. In addition, the Government has proactively engaged in the provision of online access to genealogical resources through the national repositories and its genealogy web portal irishgenealogy.ie. I am also aware of the sheer dedication and work by genealogists such as Stuart Rosenblatt who has provided the State with an invaluable 16 volume archive spanning more than four centuries. He is a guiding example to us all.
The recent report published by the Joint Committee on Finance, Public Expenditure and Reform with regard to its hearings in relation to the draft general scheme of the Freedom of Information Bill highlighted the need to seek the inclusion in the proposed legislation of the following as a guiding principle by which record holders, the State and State agencies, would give public access to records with a genealogical potential by the inclusion of a section that states that the legislation endorses and fully supports the principle of public ownership and right of access to our genealogical heritage. Doing it in this way will allow statutory instruments and departmental guidelines to take cognisance of the principle when assessing public accessibility to records with a genealogical potential.
I am cognisant that an EU regulation must be observed by all member states. The impact of the inclusion of civil registration records in the scope of the data protection directive, if that is what is proposed, would have a very detrimental impact on genealogical, biographical and historical research. While such a measure would have no impact on existing public access to genealogical resources held by the National Library and the National Archives, it could create an atmosphere of fear of litigation on the part of custodians of records of genealogical potential.
Can the Minister ensure that the revised EU data protection directive-regulation does not impair the right of the citizen to engage in bona fide genealogical, biographical or historical research and that the principle of public ownership and right of access to our genealogical heritage will be enshrined as a guiding principle? I believe genealogy should be expressly mentioned in the regulation and hope that the Minister of State can give us assurances today.
On a specific point, Article 6, paragraph 2, of the regulation should be rewritten so that it makes an exception from the general principle for processing of personal data, namely, the data subject has given consent to the processing. As a result, it would not be necessary to request consent to processing of personal data when the purpose is historical research or genealogy.
I hope we can obtain assurances from the Minister of State that the access to genealogical, biographical or historical records will not be impaired and that we will be able to ensure public access for generations to come.
I am here on behalf of my colleague, the Minister for Justice and Equality, who is unable to be present. I thank Senator van Turnhout for raising this important subject.
In the first instance, I will briefly set out the background to the European Commission's proposals for reform of data protection law. The centrepiece of existing EU legislation on personal data protection is Directive 95/46/EC which seeks to reconcile the protection of personal data with the free flow of such data within the Internal Market and to countries outside the EU. It is widely recognised that the 1995 directive needs to be updated to take account of more recent developments such as increased use of the Internet, blogs and social networking sites and increasing globalisation of data transfers. In 2010, the Lisbon treaty introduced a new legal basis for strengthened data protection standards in the European Union, and Article 8 of the Charter of Fundamental Rights of the EU enshrines protection of personal data as a fundamental right.
In January 2012, following completion of an extensive consultation process, the European Commission tabled proposals for a radical shake-up of the current regulatory framework. These proposals are being discussed separately by the Council of the European Union and the European Parliament at present. Adoption of the reform package is subject to co-decision between both institutions. Article 5 of the Commission proposal for a general data protection regulation, which sets out the principles relating to personal data processing, recognises that it may be necessary to retain personal data for historical, statistical or scientific purposes. Article 83 sets out specific provisions for the processing of personal data for historic, statistical and scientific research purposes. While the Minister has until now not been made aware of the specific concerns of the genealogical sector, he is aware that concerns have been raised that the provisions in the Commission proposal are not sufficient to accommodate the processing of personal data for historical, statistical, scientific or archival purposes. The Minister shares these concerns.
As the Senator may be aware, achieving progress on the European Commission's proposals to update the Union's data protection standards was a priority of the Irish Presidency and I am pleased to say that substantial progress was achieved on key aspects of the reform package. In June, the Minister submitted a progress report to the Justice and Home Affairs Council, which identified key aspects of Chapters I to IV of the draft regulation. In addition, a draft revised text of Chapters I to IV, which reflects the view of the Minister, as the then President of the Justice and Home Affairs Council, of the state of play of negotiations at that stage, has been prepared. The Minister has arranged to have these documents laid before the Houses for the information of Deputies and Senators. The draft revised text includes a number of proposals, which have yet to be discussed in detail at expert level, to address concerns in respect of the implications of the draft regulation for the processing of personal data for historical, statistical or scientific purposes. I understand it is intended to discuss this issue at expert level shortly. The detailed discussions relating to these proposals will provide an opportunity to consider whether proposals to deal with the processing of personal data for historical, statistical or scientific research purposes are sufficient to cover archival purposes as well as bona fide genealogical and biographical research or whether specific provisions in this regard will be necessary.
The Minister believes that the concerns relating to the implications of the draft regulation for historical, statistical, scientific or archival purposes, including for bona fide genealogical and biographical purposes, must be examined further at expert level by the Council working party on data protection and exchange of information, DAPIX, and addressed, where necessary, by means of appropriate amendments to the regulation.
I would appreciate it if copies of the Minister of State's script could be made available. Traditionally, such scripts are provided to Members. It would be useful if we were able to examine its contents.
I thank the Minister of State for the assurances he provided. I reiterate the importance of including a specific reference to genealogy to ensure there will be public access to these records when such access is for bona fide purposes. I will correspond with the Minister for Justice and Equality on this issue because it is important that it be viewed in conjunction with the general data protection regulation.
I will be happy to supply the Senator with a copy of my script. The European Commission tabled proposals for a radical shake-up of the existing data protection framework. Those proposals undoubtedly comprise one of the most important reform packages being discussed at EU level at present. Data protection affects all of us, whether in a private capacity as individuals, in a business or professional capacity or as users of personal data. It is for this reason that the Minister for Justice and Equality launched a public consultation process in March 2012 to seek the view and inputs of interested bodies and individuals in order to inform the negotiations on the proposal. The Minister continues to welcome such views and inputs on the implications of the draft regulation, particularly as discussions on this detailed and complex proposal are ongoing at European level. He would welcome the views and inputs of the Senator and others on the specific concerns which may exist in respect of the implications of the draft regulation for bona fide genealogical, biographical or historical research.
As stated, the protection of personal data is a fundamental right. However, the right to this protection coexists with other rights and this is recognised in the draft regulation. For example, Article 83 of the draft regulation sets out specific provisions for the processing of personal data for historic, statistical and scientific research purposes. The Minister is of the view that the draft regulation must be examined further to assess the implications of the proposals relating to the processing of personal data for historical, statistical, scientific or archival purposes. He would, therefore, welcome any specific amendments to the draft regulation which are considered necessary to accommodate bona fide genealogical, biographical or historical research or which take account of the need to provide high levels of data protection to individuals.
On behalf of the Minister, I again thank Senator van Turnhout for raising this important issue.
I thank the Minister of State and I will communicate the information he has provided to the Genealogical Society of Ireland and the wider genealogical community.
VAT Rate Application
I welcome the Minister of State. I also welcome Councillor Brian Collins from Kells who is in the Visitors Gallery and who is one of the driving forces behind the campaign for VAT reform.
As a businessman, the Minister of State is very familiar with the various VAT rates which obtain here in respect of goods and services. There is a need for a comprehensive review of the VAT regime. Such a review has not been carried out and what has happened is that the various rates of VAT have evolved over time. Some of these rates have been in existence since prior to our entry to the EU and some have arisen as a result of the emergence of new goods and services. This matter was not discussed by previous Governments, nor has it been discussed to any great extent by the current Administration. The only change introduced in recent times was the reduction in the rate of VAT which relates to tourism. It has been proven that this reduction has been of major assistance to the tourism industry. Those in the tourism sector lobbied strongly for the reduction and they have proved that what they requested has borne fruit. In the first six months of the year, the number of tourists coming here was up almost 20%. Some of this increase was due to The Gathering but a great deal of it reflects the value for money available in Ireland at present.
I wish to provide a number of examples of the ludicrous situation which obtains in respect of VAT at present. The rate of VAT on fruit juice is 23%, while that relating to frozen pizzas is 0%. The rate on walking sticks is 23%, while that relating to limousine hire is 0%. The Minister of State can clearly see that there is no connection between the services people need and the system of VAT currently in place. If we carry out a review of and reform our VAT regime, this would give rise to great job creation opportunities. I alluded to tourism and it is important to note that the number of jobs and the packages on offer from hotels, restaurants and others in the sector have both increased.
The rate of VAT on wool is 23%, whereas the rate which applies in respect of purchases of gold for investment purposes is 0%.
If one wishes to buy gold for investment, it is VAT-rated at 0% while something we all have to use, toilet roll, is rated at 23%. A tax manual is rated at 0%. I could go on with other examples, but given the weather we have at the moment, I will focus on that. Sun cream, sun hats, bottled water and ice are rated at 23%. One could imagine that we would almost prefer if the sun did not shine in this country since we have to pay 23% to protect us from the sun's rays.
The VAT rate in the tourism section which is in place at the moment is only temporary and must be reviewed. In that light I call for all rates of VAT to be reviewed before the next budget and for a reduction on the VAT rate on aids for the elderly, for example, which is currently at 23%, to the minimum rate of 4.8%.
On a lighter note - I cannot give it as the reason Tipperary were beaten last Saturday night by Kilkenny - surely VAT-rating a hurley at 23% does not help the hard-pressed tax hurlers in Tipperary. With that, I hope the Minister of State will have some good news about a review.
I am taking the debate on behalf of the Minister for Finance, Deputy Michael Noonan, who conveys his apologies to the Senator for not being here to reply. I am pleased to have the opportunity to contribute to today's debate and to respond to Senator Landy's motion concerning the equity of Ireland's VAT rates.
The VAT rating of goods and services is subject to the requirements of European Union VAT law, with which Irish VAT law must comply. The EU VAT directive provides that each EU member state must apply a standard VAT rate to the majority of goods and services. The standard VAT rate must be set at a rate not lower than 15% and there is political agreement that it does not exceed 25%, although it is possible to set the rate higher. Hungary has introduced a standard rate of 27% in recent years. In addition, member states may apply up to two reduced VAT rates of between 5% and 15% for a range of goods or services which are set out in annex III of the VAT directive. Member states also have the option of maintaining, at a reduced rate of not less than 12%, any items not listed in annex III, provided they applied a reduced rate to those items on 1 January 1991. This is known as the parked rate. Member states may also continue to apply the zero rate, or a rate lower than 5%, known as a super-reduced rate, to goods and services provided they applied at a zero rate or a super-reduced rate to those items on 1 January 1991. However, it is not possible to introduce a zero rate or a super-reduced rate on any new items. That point must be made.
In the context of the rules at EU level regarding VAT, the structure and scope of Ireland's VAT rates are as follows. The standard VAT rate in Ireland is 23% and applies to such goods as cars, petrol, diesel, alcohol, tobacco, electrical equipment, CDs and DVDs. Ireland applies two reduced VAT rates of 9% and 13.5%. The 13.5% rate applies mainly to residential housing, labour-intensive services and general repairs and maintenance. In addition, the 13.5% parked rate applies to fuel used for heat or light and commercial construction. The 9% reduced rate applies mainly to tourism services including hotel and holiday accommodation, restaurant services and various entertainment services. The rate was introduced as part of the jobs initiative and applies from 1 July 2011 until end December 2013. Those services at the 13.5% rate that had been parked were prohibited under the EU VAT directive from availing of the 9% rate. The zero rate applies to most food, children's clothes and shoes and oral medicines. Ireland also applies a super-reduced VAT rate of 4.8% but this is limited to livestock sold by VAT registered persons. In addition, services provided by non-profit organisations, transport operators, medical professionals, undertakers and certain financial services are exempt from VAT, as are schools and hospitals, etc. Exempt suppliers do not generally charge VAT on the services they provide and cannot reclaim VAT incurred on the goods and services they purchase.
As of 1 July 2013, a total of 23 of the 28 EU member states have a standard VAT rate of 20% or higher. The average standard rate in the EU is 21.5%. Six member states have a higher standard VAT rate than Ireland, namely, Hungary at 27%, Denmark, Sweden and Croatia at 25% and Finland and Romania at 24%. This means Ireland has the joint seventh highest standard VAT rate, along with Portugal, Greece and Poland, at 23%. A further 13 member states have a rate of between 20% and 22%.
The trend among EU member states has been to increase VAT rates as a means of covering the budgetary shortfall generated by the economic downturn. A total of 23 of the 27 member states, not including the recently acceded Croatia, have increased their VAT rates since 2008, with 18 member states making an increase in their standard rate alone. Of the member states that have not increased their VAT rates during this period, two already have in place the maximum standard rate of 25%.
VAT increases continue to be considered. In October 2013, Italy is due to increase its standard VAT rate to 22%. In January 2014, France will increase its standard VAT rate to 20% and its reduced rate from 7% to 10% and Cyprus will increase its standard rate to 19%. In addition, Luxembourg, which has the lowest standard VAT rate in the EU, also plans to increase its standard rate in 2015. At 13.5%, Ireland has the fourth highest reduced VAT rate in Europe after Hungary, at 18%, the Czech Republic, at 15%, and Finland, at 14%. However, we apply reduced rates to an extensive range of goods and services relative to other member states. In addition, Ireland, along with the United Kingdom, is unique among member states in applying a zero rate of VAT to a sizeable proportion of economic activity. In contrast, for example, Denmark applies a rate of 25% to all taxable activity, as it does not have any other VAT rates in operation.
There is equity in the application of Ireland's VAT rates. While the system of VAT rating in Ireland is often historic, the application of Ireland's VAT rates is none the less very equitable. In applying the zero VAT rate to basic foods, medicines and children's clothes and the 13.5% reduced rate to domestic fuels, the burden of VAT is reduced on basic commodities and utility services, which results in a lower tax burden on the less well off. The application of the 13.5% reduced rate to construction and labour intensive services and general repairs as well as the maintenance and the application of the 9% reduced rate to tourism services encourages employment through the reduced VAT burden on service related businesses. The VAT system encourages good health by applying the 23% standard VAT rate to alcohol, tobacco and sugary foods. The environmental benefits of applying the standard rate to cars, petrol and diesel are also evident. I point to the equity of Ireland's VAT rates. It is also made apparent in the context of the scope of VAT rates in other EU member states. Ireland applies reduced and zero rates of VAT to a much higher proportion of goods and services than any other member state. Ireland is one of a small number of member states which apply the zero rate to basic foods and medicine. Ireland is also among a small number of member states which apply a reduced rate of VAT on domestic fuels.
I wish to draw the attention of the House to the fact that Ireland's VAT rates, their scope and their structure, are revised on an annual basis in the context of the annual budget. Such reviews takes into consideration the equity of VAT rates, along with the EU legislative constraints and the Exchequer and economic impact of any potential changes. Accordingly, the scope of the VAT rates will be reviewed in advance of the upcoming budget in this context. That is a comprehensive reply in a complex area.
I thank the Minister of State for what was, as he said himself, a comprehensive review of the VAT situation in Ireland. I accept that we have made great strides in this area and we are ahead of many other EU countries. I have highlighted some particular items. A fisherman needs lobster pots to go fishing for lobster and he must pay 23% VAT on the lobster pot. However, when a customer buys lobster over the counter he pays 0% VAT. There are some areas we can improve. I welcome the fact that there will be a full review. It is timely that I brought forward this Adjournment topic because we have made great strides in tourism by reducing the rate. We could demonstrate more equity and fairness, especially to vulnerable people in society. For example, I have outlined that the rate for aids for the elderly, currently at 23%, should be reduced to the minimum rate.
I hope we can look at all those areas in the review before the budget 2014. I thank the Minister of State.
As regards the 9% VAT rate, it is important to note that every reduction costs a considerable amount of money. As to the numbers employed in the tourism sector, research was carried out by the Department and published in the medium term fiscal statement in November 2012. This report entitled Measuring the Impact of the Jobs Initiative examined where the VAT reduction had been passed on and where jobs were created. It contains detailed information on the impact of the 9% VAT rate on prices and employment numbers. The report is available on the website.
Using the statistics from the CSO, the report indicates that an additional 6,200 jobs have been created in the accommodation and food sectors for Q2 2011, and there was an increase of 6% in Q2 2012. While other factors impact on employment rates in these sectors, I have no doubt the 9% VAT rate has contributed in no small way to those employment gains. Furthermore, these figures underline the positive impact of the 9% VAT rate as comparable sectors experienced a decline in employment numbers over the period concerned. This indicates that employment in the accommodation and food sectors may also have declined without the introduction of the 9% rate.
With regard to prices in the tourism sector, the response to the 9% VAT rate has been positive. The report indicates that the VAT reduction was for the most part passed on to consumers. While tourism numbers fluctuated over the period since the introduction of the 9% rate in July, expenditure by overseas travellers in Ireland in 2012 increased by €37 million over 2011. This excludes transport and air travel costs which are exempt from the VAT rate.
The Seanad adjourned at 6.45 p.m. until 10.30 a.m. on Wednesday, 10 July 2013.