Dáil Éireann díospóireacht -
Tuesday, 10 Feb 1998

Vol. 486 No. 6

Written Answers. - VAT Refunds.

Proinsias De Rossa

Ceist:

186 Proinsias De Rossa asked the Minister for Finance if, in regard to his reply to Parliamentary Question No. 87 of 28 January 1998, the number of farmers registered for VAT; the number of unregistered farmers; the VAT refunds made to registered farmers broken down by rates and value; the nature of the farm enterprises involved; the average purchases zero rated and other rates; if in view of the fact that most farm inputs, fertilisers and feedstuffs, are zero rated and those inputs which are not zero rated, fuel oil and vet fees, are relatively minor costs; the reason a refund of £93 million for farmers can be justified in view of the fact that this would require expenditure by non-registered farmers of some £600 million per year on items which are not zero rated; and if he will make a statement on the matter. [3109/98]

Minister for Finance (Mr. McCreevy)

I am informed by the Revenue Commissioners that there are approximately 4,000 farmers optionally registered for VAT and approximately 105,000 unregistered farmers.

It is estimated that refunds of the order of some £20 million were made to VAT registered farmers in 1997, of which £3.5 million was at the livestock rate of 3.3 per cent, £6.1 million at the 12.5 per cent rate and the remaining £10.4 million at the 21 per cent rate.

The types of farm enterprises involved are too numerous to itemize. Examples of the enterprises involved are livestock breeding, cattle breeding, arable farming, dairy farming, chicken farming and market gardening.

It is estimated that the total expenditure by unregistered farmers on current and capital farm inputs for 1997 was of the order of £1,781 million. Some £675 million of that sum was expended on non-zero rated farm inputs such as farm machinery, agricultural contractors and insecticides. It should be noted that not all of the expenditure of £675 million on non-zero rated farm inputs would be allowable as deductible VAT —for example expenditure on petrol.

The cost to the Exchequer of the operation of the flat-rate scheme in 1998 is estimated at £93.11 million. The flat-rate scheme is a practical method of applying VAT to farming. It seeks to compensate unregistered farmers on an overall basis for the VAT charged to them on their purchases of goods and services without applying the normal rules regarding registration, record keeping and returns. The tax compliance burden for participating farmers is minimal and the State is also relieved of a significant administrative burden.