Jimmy Deenihan
Ceist:124 Mr. Deenihan asked the Minister for Finance the expected yield from the increase in VAT on car hire to 21 per cent; and if he will make a statement on the matter.
Written Answers. - VAT on Care Hire.
In the budget I announced that the VAT rate on short term car hire would move to 12½ per cent with effect from 1 March 1993, in the context of a general increase applying to all goods and services which were previously at the 10 per cent rate and a consolidation of the VAT rating structure in general. I also announced my intention to further increase the rate applying to short term care hire to 21 per cent from 1 September next. This second increase was estimated to yield £0.6 million in the current year.
Subsequent to the budget, I decided, in response to the many representations received from tourism interests, to defer the application of the standard rate due on 1 September: this position is reflected in the Finance Bill as published last week. When taken in conjunction with the proposed reliefs in relation to Vehicle Registration Tax for the short term hire sector, this concession should further underpin the financial viability of the sector, thereby facilitating an increase in the size of hire fleets. I should point out, however, that in accordance with the EC VAT Rates Directive, short term car hire is ultimately destined for standard rating.