Vol. 412 No. 5
61 Mr. Finucane asked the Minister for Finance the implications for Ireland as a result of the decision of the United Kingdom to remain outside the provisional VAT regime agreed at the ECOFIN Council on 24 June 1991 and scheduled to come into effect at the beginning of 1993; and if this difference in VAT regimes will have an adverse effect on our competitiveness with the United Kingdom.
The United Kingdom has not decided to remain outside the agreement on harmonised VAT rates reached by ECOFIN Council on 24 June last. The UK disagrees with the method of implementing part of that package but not the package itself. While eleven member states are of the opinion that a binding Council Directive is the most effective way to implement the agreement on the standard VAT rate, the UK contends that, when border controls are removed, market forces will be sufficient to ensure member states' compliance with the harmonised regime. As the Deputy will be aware, the UK standard VAT rate of 17½ per cent already exceeds the minimum standard rate of 15 per cent agreed by Council. The Irish standard rate is currently 21 per cent.
I do not foresee any particular implications for our competitiveness as a result of the UK's stance. In any event, legal texts giving effect to the earlier agreement remain to be discussed and adopted.
