I propose to take Questions Nos. 28 and 54 together. In May 1989 the EC Commission tabled revised proposals for approximation of VAT. These provided for a minimum standard VAT rate of about 15 per cent, a reduced rate in the range 4-9 per cent, and the option of a zero rate in respect of a limited but unspecified range of goods. The Commission's excise proposals have not yet been tabled but I understand that these will be available shortly.
Discussions on the VAT proposals are proceeding. Agreement has been reached in the Council of Ministers on certain structural aspects, in particular, the continued application of zero-rating to exports and the charging of VAT in the country of consumption. However, the whole question of rates of both VAT and excises remains to be settled.
The Government's policy in this area is to participate fully in the realisation of the internal market while at the same time ensuring that this does not entail any unsustainable loss of revenue or serious damage to the economy as a result of tax approximation. We are continuing our efforts to find solutions to these problems with our Community partners.
Since matters have not yet progressed to the point where the shape of an agreed package is clear, it is not possible to say whether persons on low incomes will require protection from indirect tax harmonisation. Deputies can take it, however, that this aspect will be considered carefully by the Government.
There are no live proposals to harmonise deposit interest retention tax.
Proposals were put forward last February by the European Commission for the introduction of a minimum Community-wide withholding tax on interest income; member states would have been free to impose a higher rate on their own residents. The proposals, which Ireland broadly supported, were opposed by a number of member states and, although they have not been withdrawn by the Commission, they seem very unlikely to be agreed.