Wednesday, 10 July 2013

Questions (98)

Stephen Donnelly


98. Deputy Stephen S. Donnelly asked the Minister for Finance if he will provide, in tabular form, the expected revenue that would be generated for the Exchequer in 2014 through Value Added Tax at each percentage point from 0 to 35 for each of the separate categories of produce that Value Added Tax is charged on; and if he will make a statement on the matter. [33875/13]

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Written answers (Question to Finance)

I am informed by the Revenue Commissioners that the full year cost or yield to the Exchequer from increasing or reducing the 9%, 13.5% and 23% rates, are provisionally estimated as follows. These figures are estimates in terms of 2013 expected yields. Corresponding estimates for 2014 are not yet available.

VAT rate

Estimated cost/yield from 1% change


+/- €125m


+/- €230m


+/- €250m

A pro-rata calculation may be applied to these figures to arrive at the impacts of greater or lesser increases or decreases to the respective rates.

The Deputy will be aware that Irish VAT law is governed by the EU VAT Directive, and any changes made to the VAT rates must be guided by EU VAT law. In this context, where the zero rate of VAT is increased, children’s shoes and clothes could only be increased to the standard rate (23%) while other goods at the zero rate could be increased to a reduced rate of 5% or more, provided only two reduced VAT rates are in operation. As such, there are no figures provided for a 1% increase on the zero rate. In addition, most items applying currently at the 13.5% cannot be reduced below 12%.

As stated earlier, the costings in the table relation to the 9% VAT rate relates to 2013 figures. From 2014 all goods and services applying at this rate are scheduled to revert to 13.5%, and so any change that would result in a rate lower than 13.5% on this activity would result in a cost to the Exchequer. However, costings in relation to the items currently at the 9% rate for 2014 are not yet available. Any decision on a deviation from this policy will be taken in the context of Budget 2014.