I move amendment No. 44:
In page 21, line 4, to delete " delivery " and to substitute " supply ".
SECTION 20.
Amendment agreed to.
Amendment No. 49 is consequential on amendment No. 45 and the two amendments may be discussed together.
I move amendment No. 45:
In page 21, paragraph (b) to delete lines 11 to 22.
Was this necessary?
This amendment is consequential on amendments Nos. 25, 41 and 42 which provide for an alternative method of providing full relief for the services in question rendered outside the State rather than having them specified in the Second Schedule to the VAT Act.
Where are they specified now?
In amendment No. 25.
Amendment No. 25 included them in section 10 and amendment No. 45 excludes them from section 20. Is the result the same? Is the exemption granted?
Yes, and the same with amendment No. 49.
Amendment agreed to.
Question proposed: " That section 20, as amended, stand part of the Bill."
I note from the explanatory memorandum that the first paragraph of the section dealing with section 20 says:
It should be noted that Ireland's present zero ratings for food, clothing, footwear, etc. can be retained.
Could the Minister of State give us some indication of how section 20 continues this capability for us? How does it relate to our present zero rating system? Can he give us an assurance that the zero rating for food, clothing and footwear definitely will be retained?
Item No. (xii) of the Second Schedule covers food and drink used for human consumption. Item No. (xvii) covers personal clothing and footwear.
In the Original Act?
In the Second Schedule of the Original Act. The Deputy can be sure that it is covered here but the directive envisages a review of the continued need for these reliefs by the EEC Council every five years. Any change in the present position would require a unanimous decision of the Council of Ministers.
When is the next review due?
In 1982.
And there has to be unanimity.
I note that the zero rating applies to certain ships. There is reference to sea-going vessels of a gross tonnage of more than 15 tons, being vessels used or to be used, among other things, for the purposes of a sea fishing business. How was the 15-tons limit arrived at? While it is obviously important to have an exemption for large fishing vessels, there are about 6,000 small inshore fishermen who contribute about 40 per cent of the catch and they might not benefit from this.
The 15-tons definition is a requirement of the directive. In the case of commercial fishermen using vessels of less than 15 tons, their present relief will be continued. If a fishermen gets assistance from BIM for the purchase of a fishing vessel, he can apply to the Revenue Commissioners and obtain repayment of the VAT. That position will continue.
The BIM policy is heavily weighted in favour of considerably larger boats. Perhaps these boats are less than 15 tons.
Could the Minister give some indication of the size of a 15-ton boat?
Boats of the same weight can be different sizes, depending on the design.
If 15-ton boats were 60 feet in length, I imagine 90 per cent of fishermen would have smaller boats.
The present position is that there is no exemption for a boat of any sort and in general the present relief takes care of virtually all boats used by commercial fishermen. The zero rating is not intended to add anything to that other than to obviate the necessity of a formal claim for repayment where a fisherman buys a boat which is over the 15-ton limit. BIM are satisfied that the present arrangement provides effective relief to commercial fishermen in general.
Have BIM seen the Bill? Are they satisfied that it will not in any way disadvantage the smaller fishermen?
BIM have not indicated any dissatisfaction with the relief. It is expected that there will still be a substantial number of boats qualifying for BIM support and less than 15 tons.
Does this aspect of the directive come up for review at any time? If so, will the Minister bear in mind any penalising effect on fishermen?
It is important to remember that the position regarding BIM has existed since 1972. Apparently everyone has lived happily with it since then. There is no real change. The fisherman still has the option to register for VAT and get direct relief on everything he buys for the purpose of his fishing business.
I refer to the zero rating on fur coats vis-�-vis the non-zero rating on blankets. Would it be possible to incorporate blankets? Is it correct that repairs to footwear are subject to a VAT rating?
Fur coats are subject to 20 per cent VAT. Repairs to footwear are subject to 10 per cent VAT.
If fur coats are simply regarded as clothing, are they liable for VAT?
There is a formal definition in the VAT Act of fur clothing which does not benefit from the zero rate. The definition is negative. In effect, it excludes fur clothing from the zero rating for clothing generally. Fur clothing automatically falls into the general 20 per cent rate which applies to any goods not specified at a lower or higher rate.
Could blankets not be embraced within the overall definition of clothing and thereby be zero rated?
Many items are caught within the 20 per cent rating, such as furniture, furnishings, blankets, prams and bicycles. All these items have been covered by this rate since 1972. The question of any changes would be a matter for consideration by the Minister for Finance in the budgetary context. It would not arise on the directive.
Question put and agreed to.