Vol. 451 No. 6
48 Mr. M. McDowell asked the Minister for Finance if his attention has been drawn to the competitive disadvantage experienced by Irish newspaper publishers in view of their liability to VAT; whether he has raised at EU level the possibility of excluding Irish newspaper publishers from such liability; and if he will make a statement on the matter. [6959/95]
The Deputy will be aware that I am fully conscious of the difficulties facing the newspaper industry in Ireland. This was the reason, as Minister for Enterprise and Employment, I established the Joint Working Group on the Future of the Newspaper Industry. Furthermore, the Competition Authority has, I understand, just recently reported on the question of foreign competition and the separate question of dominance in the industry within Ireland.
I fully accept that Irish newspapers face stiff competition from UK publications. The latter have greater economies of scale and lower production costs which allows them to cater for the Irish market at marginal costs. The fact is, however, that this type of competition does not arise from the rate of VAT applied to newspapers in Ireland, which applies equally to both Irish and to foreign publications, but rather from the commercial non-tax factors mentioned. I appreciate, of course, that the newspaper industry may feel aggrieved that newspapers sold in Britain enjoy a zero rate, while newspapers sold in Ireland are taxed at 12.5 per cent. However, a reduction in the VAT rate here, even if that were possible, would not solve the core problem for Irish newspapers. A lower VAT rate in Ireland could make no significant difference to the present very large price differential existing between Irish and Britisn newspapers.
