Vol. 519 No. 7
80 Mr. Broughan asked the Minister for Finance the plans, if any, he has to adjust indirect taxation in an autumn budget to control inflation; and if he will indicate the effects of cuts of 1%, 2% and 3% in VAT, respectively, in the current annual inflation rates. [14800/00]
I looked at all the options regarding indirect taxation before the last budget, including the possibility of making changes to VAT rates, and I will examine these options further in the run up to the next budget. My priority has been to cut direct tax rates to encourage the supply of labour, capital and enterprise and in this way expand the productive base of the economy and our ability to meet the demand side pressure on resources on an ongoing basis.
The effect of a 1%, 2% and 3 % cut in the standard rate of VAT, if fully passed on in retail prices, would reduce the consumer price index by 0.4%, 0.8% and 1.2%, respectively.
