asked the Minister for Finance if he will consider taking similar measures to those taken by France recently in reducing the rate of value-added tax and launching a large national loan as a means of combating inflation.
Ceisteanna—Questions. Oral Answers. - Value-Added Tax.
8.
The overall economic situation is kept under continuing review by the Government and any further action necessary will be taken if the situation should so demand. As to the position generally, I would refer the Deputy to my budget statement of April last in which I indicated the broad lines of the economic policy being followed this year. With regard to prices, I would remind him of the valuable work being done by the National Prices Commission.
As to the specific points mentioned by the Deputy, he will appreciate that, in France, even after the reduction from 7½ per cent to 7 per cent announced on basic necessities generally, the rate of VAT on these commodities will still be appreciably higher than that of 5.26 per cent which applies in Ireland. As to a further large national loan, the Deputy will be aware that the most recent loan, which closed on 24th November, raised £35 million—by far the greatest amount taken up by a national loan. In addition, extra branches of existing stocks are continually offered for sale on the market; because of this, funds which become available for gilt-edged investment are being absorbed and consequently there would be little justification, or, indeed, scope, for another major national loan at this stage.
Why does the Minister say there would be little scope for a further loan in view of the success of the last one? I daresay it will come in about six or eight months' time.
We are talking about a loan which closed on 24th November last, less than one month ago, by far the largest loan we ever had. In those circumstances it should be clear that, as I said, there is little scope and, indeed, little justification, for a further loan at this stage.
Was it the largest in real money value?
Yes.
Did the measures taken in France involve a substantial reduction in the rate of value-added tax on food?
From 7½ per cent to 7 per cent; ours is 5.26 per cent.
Of course their rate of indirect taxation is not on the same scale as ours.
If you take in their social welfare contributions, it is far higher. I am speaking offhand. Their highest rate is 33? per cent.
Their children's allowances are higher.
In proportion to contributions.
People are able to pay a little more because of that.