Dáil Éireann Debate, Wednesday - 14 December 2011
69 Deputy Michael Healy-Rae asked the Minister for Finance if he will reverse the VAT increases, in view of the fact that there are many persons who will be affected by this change; and if he will make a statement on the matter. [40086/11]
View answerThe standard rate of VAT will be increased by 2 percentage points from 21% to 23% from 1 January 2011. This change is being introduced as part of a general package of revenue-raising measures to contribute to Exchequer funding and is in line with commitments made in the Programme for Government and in the EU/IMF Programme. The effect of the 2% increase in the standard rate is that the price of goods and services, which apply at this rate, will increase by 1.65%. This equates to an increase of 33c on a good costing €20, or €1.65 on a good costing €100.
It must be noted that the 2% standard VAT rate increase will have no impact on the goods and services subject to the other VAT rates in the Irish VAT structure. There will be no change to the price of most food, children's clothes and footwear and oral medicines, as these are subject to the zero rate of VAT. Domestic fuels, housing, labour intensive services and general repairs and maintenance apply at the 13.5% VAT rate which is not being increased. Furthermore, restaurant services, hotel and holiday accommodation, and various entertainment services will not be subject to a VAT increase as they continue to apply at the 9% rate.
