Vol. 416 No. 8
1 Mr. Barry asked the Minister for Industry and Commerce if he will introduce regulations to govern rental charges for television sets, videos and other products so as to ensure that the charges are justified and that when charges such as VAT are reduced, the reductions are passed on.
I have no plans to introduce detailed price control in respect of rental charges for television sets, videos and other products, as I believe that it discourages competition and indeed fuels an inflation mentality.
The continuing general thrust of policy here, also adopted by previous Governments since the mid-eighties, is to promote competition and refrain from direct inteference in trade and to avoid any controls, measures or structures that would impose unnecessary burdens or consume scarce Exchequer resources, funded by taxpayers.
I would emphasise that, ultimately, it is in the hands of consumers themselves to ensure that they reap the benefits of a competitive market by being aware of price developments and prices charged by different outlets and by purchasing accordingly.
While the main thrust of the Minister's reply is not unacceptable, there is another factor here he should take into account, that is the hiring of what are termed "brown goods" in the electrical trade, commodities such as television sets and the like, as we observed in the recent controversy vis-à-vis the ESB, which are frequently bought on hire purchase, rental agreements and or deferred payment agreements. Sometimes within the period of any such agreement, when there is a reduction or a change in taxes — as happened last year in the reduction of the higher VAT rate — such reductions are not passed on to the hirer of the equipment. Would the Minister ensure that any such reduction would be passed on to the consumer, or at least that he would issue instructions to the traders concerned to so do?
I believe it did happen this year. There was not a VAT reduction this year on these goods but there were substantial reductions in excise duties in the budget effective from 29 January last. My information is that the trade did pass such reductions on, in that they advertised "duty free televisions and videos" in the immediate post-budget period.
With respect, that is not the same thing. That would refer to a television set hired or rented for the first time, whereas I am talking about sets, say, hired under agreement two years ago and on which excise duty would have been paid at that time. The VAT on the rental would still be carried through. If there was a reduction in VAT that should be passed on as well.
If there was a reduction in VAT but, as I told the Deputy, there was not a reduction in VAT is this budget——
There was last year.
Yes, there was last year when the Director of Consumer Affairs was asked to ensure that reduction was passed on last year. But in respect of television sets, for example, the hire of which commenced prior to the budget, the removal of excise duty on them would not affect their capital cost and therefore would not affect their rental. Of course, there would be an effect on the rental of sets hired after budget day this year. I believe that lower rentals do reflect the repeal of all excise duties.
I have no complaint with what the Minister is saying except in the example I have given of sets hired prior to the 1991 Budget and which incorporated the cost of the VAT at the then rate. The VAT has been reduced, therefore the rental of these sets should be reduced. Is the Minister aware that, during the recent controversy in regard to the ESB and retail traders ESB workers contended that many independent traders were not passing on those VAT reductions, which is the reason for my tabling this question?
Another factor that arose in the course of that controversy as well, from the other side of the fence, was the contention that the ESB were not providing an after-sales service. Therefore I will be requesting the Minister next month, when questions arise again, to ensure that all suppliers of goods will provide requisite after-sales service as well.
I look forward to the Deputy's question next month. I will answer it then.
