I move:
(1) THAT the rate of value-added tax on the supply of certain goods and services at present chargeable at the rate of 12.5 per cent be increased to 13.5 per cent of the amount on which tax is chargeable in relation to the supply of such good and services, and that, accordingly, subsection (1) (inserted by the Finance Act, 1992 (No. 9 of 1992)) of section 11 of the Value-Added Tax Act, 1972 (No. 22 of 1972) be amended by substituting in paragraph (d) "13.5 per cent" for "12.5 per cent" (inserted by the Finance Act, 1992).
(2) THAT this Resolution shall have effect as on and from 1 January 2003.
(3) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1927 (No. 7 of 1927).
This resolution provides for an increase to 13.5% on the supply of all 12.5% rated goods and services with effect from 1 January 2003. This change will apply to all goods and services which are currently rated at 12.5%. The increase will raise €187 million in 2003 and €224.5 million in a full year.
The difference is due to the way in which VAT is collected as the change in the rate will only apply in respect of five two-monthly VAT periods in 2003. There are six VAT periods of two months each in any year but VAT due for the period November-December only falls to be paid in January the following year. The increase in the 12.5% rate will add approximately 0.18% to the CPI.
This increase, along with the changes in excise duties and other changes in the budget, is necessary to raise revenue for improved and more efficient public services. The need to raise revenue arises from changed economic circum stances, which have had an impact on Exchequer revenues generally.