asked the Minister for Finance if he will consider, in the context of the next budget, increasing the VAT rebate on pigmeat in view of the current income difficulties of pig producers; if he will clarify the reason other EC member states have more favourable VAT rebate systems for similar producers; and if he will make a statement on the matter.
Written Answers. - VAT Rebate on Pigmeat.
113.
Unregistered farmers, including those engaged in pig production, are compensated on an overall basis for the VAT charged to them on most of their agricultural inputs by means of a flat rate addition, currently 2.4 per cent, to the prices at which they sell their goods or services to VAT registered traders. As the level of the addition is determined by the levels of the main rates of VAT no adjustment in the former would be appropriate until these main rates change.
I do not propose to apply a separate increased flat rate addition to the pig production sector of the agriculture industry. Apart from the practical difficulties in applying sectoral rates, it is doubtful, due to the extensive VAT zero-rating of the major inputs used by pig producers, that such producers would be entitled to a level of flat rate addition above the current rate applying to unregistered farmers generally.
I would not accept, however, that pig producers are less favourably treated under the VAT system here than is the case elsewhere in the Community. Most member states operate flat rate schemes and these vary in certain respects from one country to another. As the level of the flat rate is a function of the rates and coverage of VAT on agricultural inputs and as these vary from country to country, rates of flat rate will inevitably vary between member states. However, EC VAT law explicitly states that the flat rate schemes may not be used to obtain for farmers refunds greater than the VAT charged on their inputs.
Unregisterd farmers in Ireland, including pig producers, have one advantage over their counterparts in other member states; they can recover in full the VAT on outlay on buildings and land improvement. This concession is unique to Ireland.