asked the Minister for Finance if he is aware of the continuing high level of cross-Border smuggling of electrical goods; if he agrees that the main reason for this is the high level of VAT on these goods; if he is aware of the serious drop in trade in Drogheda, Dundalk, Ardee and elsewhere in Louth; if he will consider making a reduction in VAT; and if he will make a statement on the matter.
Written Answers. - VAT Rates.
I am aware that despite the significant level of seizures by the Revenue Commissioners there may still be some smuggling of electrical goods across the Border and I accept that the significant tax differential on these goods between here and Northern Ireland has a bearing on this situation. Trade statistics are not available to me on a local or regional basis to indicate the level of business in electrical goods in particular towns.
The 23 and 35 per cent VAT rates which apply, among a wide variety of other goods, to electrical items, are high. This fact is acknowledged in the recently published National Plan, and, as outlined therein, there will be reductions in these rates on a selective basis. Naturally, I cannot say at this time what form the reductions will take. I feel I should mention, however, that, as indicated in the plan, if the high VAT rates are to be reduced in a significant way then VAT will have to be progressively applied to items which heretofore have been VAT-free or liable at a very low rate of VAT.