andMr. P. Gallagher asked the Minister for Finance if he will exempt all marine life saving equipment from VAT in view of the urgent necessity to promote safety at sea and on inland waterways.
3.
Ceisteanna — Questions Oral Answers - Marine Life-Saving Equipment.
2.
asked the Minister for Finance if he is aware that there is a 35 per cent luxury VAT rate on all marine distress equipment and on the hiring of life rafts; and if he will make a statement on the matter.
I propose to take Questions Nos. 2 and 3 together.
The VAT rate on marine safety equipment is one of the issues which I shall examine in the course of my preparations for the 1984 budget. I should remind the Deputies that relief from VAT is given at present on a number of items used in marine life-saving, as follows:
Sea-going rescue vessels of more than 15 tons are zero-rated;
Articles of clothing, for example life-jackets, are zero-rated;
Refunds of VAT paid on the purchase or hire of life boats or rafts can generally be obtained by VAT unregistered sea-fishermen;
The Royal National Lifeboat Institution's activities are zero-rated; consequently all VAT incurred, which is included in its returns, is repaid by the Revenue Commissioners.
VAT registered sea-fishermen can, of course, deduct VAT paid on any equipment used for their business activities.
Other items used in marine life-saving are generally taxable at the 35 per cent rate. The short-term hire of life rafts is, however, liable at the 23 per cent rate.
I hope I can detect a note of readiness to re-examine the position from the Minister's opening reference that he would look at it in the context of his budget. I am sure the Minister will acknowledge that VAT at the luxury rate of 35 per cent on things such as life rafts, fire fighting equipment, distress signals, flares and lifebuoys is a major disincentive against safety at sea. Will the Minister acknowledge that only a very small minority of the fishing vessels are actually registered for VAT and can reclaim it? In view of the need to encourage safety at sea or on our inland waterways whether in fishing vessels, pleasure cruisers or anything else, will the Minister in the course of his examination look at this very seriously to ensure that safety, which is obviously so urgent if one is to judge from recent events, will be promoted as a matter of policy?
There are two points in what the Deputy has said. The 35 per cent rate, as the Deputy knows, is the normal rate of VAT.
It is the highest rate.
It is the highest rate, not a luxury rate. The second point is that I would like to remind the Deputy that VAT unregistered sea fishermen can generally get a refund of VAT on the purchase or hire of lifeboats or rafts. That is a specific provision which applies for the refund of VAT in the case of those unregistered people similar to the refund of VAT which can be obtained by farmers in certain cases.
Would the Minister agree that the revenue from the 35 per cent VAT, which includes fire fighting equipment, distress signals, flares and lifebuoys, will have only marginal effect on the revenue to the Department? Does he agree that if we had zero VAT rating on this equipment more people would be in a position to purchase this equipment and while we could never measure what we would save in monetary terms hopefully we could measure it in terms of life?
I accept that the total amount involved here is not very large. I have made the point that for those who use these items in the course of their business in the normal case they can get a refund of the VAT so there is no net burden on the people using these items in the course of their business. The final part of Deputy Gallagher's question concerns people who are using these items in the course of their recreational activities, which is where the difficulty arises. The VAT inclusive price is a part of the total cost of their recreational activities. VAT, as Members know, is a tax on final consumption.
Would the Minister accept that the people involved in this for recreational activities are giving an excellent service, that most of the divers along the coast are unpaid and are doing this for recreation, nevertheless they are giving a service to the public and they are doing a job that possibly no Government Department could do or pay a person to do? Would he give a commitment to the House that he will seriously consider removing this 35 per cent and leaving it at zero rating?
In relation to recreational activities I am sure the Minister is as concerned as anybody else that people who avail of our tourist facilitis on our inland waterways or at sea should also be encouraged to use life saving equipment? Would the Minister in fact distinguish between those who may be amateurs and those who are professionals in providing that equipment?
I feel that Deputy O'Kennedy and Deputy Gallagher are pressing the argument past the point which is really appropriate for this kind of discussion. I do not dispute what they have said. I said it is one of the items I will consider in the preparation of the 1984 budget. As both of the Deputies know, this is not an area which can safely and completely be sealed off from any other area that is now subject to VAT.