Special Committee on the Finance Bill, 1992 debate

SECTION 150.

Chairman

Amendment No. 119 is in the name of an tAire.

Amendment No. 121 is cognate. Amendments Nos. 119 and 121 may be discussed together, by agreement.

Mr. B. Ahern

I move amendment No. 119:

In page 163, subsection (1), line 37, after "services," to insert "stock-minding or stock-rearing,".

These amendments are necessary because the changes to section 8 of the VAT Act provided by section 150, in so far as they relate to agricultural services, go somewhat beyound what was originally intended. The Finance Bill provides that farmers would be obliged to register an account for VAT on all their supplies of goods and services where the supplies of agricultural services, other than insemination services, exceed £15,000 per annum. The intention is to require farmers involved in agricultural contracts to enter the tax net, thus eliminating an unfair advantage enjoyed by such farmers over full-time agricultural contractors. However, the amendment as it stands would also affect stock minding and stock rearing services supplied by farmers. This would affect race horse trainers, stud farms and other related services in the race horse industry. It is not intended that the treatment of such services should be changed.

The Committee Stage amendment now proposed specifically excludes stock minding and stock rearing services from the scope of the £15,000 annual service threshold, thus ensuring that the treatment of these services remain unchanged. The rate of VAT on stock minding, stock rearing and other related services is being reduced from 21 per cent to 12.5 per cent by section 177. The yield effect of this amendment would be negligible.

Mr. Noonan (Limerick East)

Does this arise from the stud farms? Is it the intention to exempt the farmer within a catchment area of the stud farm who frequently takes in a mare and holds on to the mare and foal subsequently?

Mr. B. Ahern

It allows for a flat rate.

Mr. Noonan (Limerick East)

Will the Minister explain the exclusion of insemination services? That was controversial at one stage. Are all insemination services exempt from VAT?

Mr. B. Ahern

Yes. All of the AI stations under the Dublin and Cork District Milk Boards and all co-op services have to be registered with the Department so it is easy to control them. Originally the proposed rate was 12.5 per cent but the fear of agricultural co-operatives and those interested in preserving high quality herds was that people would go elsewhere and pay no VAT. That would interfere with the high standards achieved by using the good bulls the AI services have as against scrub bulls which could be used elsewhere. It is a better system.