Dáil Éireann - Volume 451 - 05 April, 1995
Written Answers. - VAT on Newspapers
Mr. M. McDowell Mr. M. McDowell
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]
Minister for Finance (Mr. Quinn) Ruairí Quinn
Minister for Finance (Mr. Quinn): 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.
As regards the VAT rate applied to newspapers in Ireland, I am sure the Deputy will appreciate that, for budgetary and other reasons, it would not be possible for the Government to provide a concession in this area. While a rate as low as 5 per cent for newspapers would be permissible under EU rules, it would be very costly in terms of revenue foregone and would, quite understandably, give rise to immediate pressure from other sectors to be allowed the  benefit of that trade, which would increase the cost even further.
As to whether the newspaper publishers in Ireland could be absolved of their VAT liability, I must confirm that this would be contrary to the provisions of EU VAT law and, given all the circumstances involved, I have no reason to believe that raising the matter at EU level would serve any useful purpose.
Dáil Éireann 451 Written Answers. VAT on Newspapers