asked the Minister for Finance if the VAT rate on contraceptives was increased this year; the amount of such an increase; and the estimated amount of additional revenue which will be realised by this increase.

14.

asked the Minister for Finance if the rate of VAT on contraceptives was increased; and, if so, the amount of additional revenue collected as a result.

With the permission of the Ceann Comhairle, I propose to answer Questions Nos. 13 and 14 together. The VAT rates appropriate to different types of contraceptives are the zero rate for one type and the 20 per cent rate for others.

I am informed by the Revenue Commissioners that, due to an error of classification, the VAT rate of 10 per cent was incorrectly applied to two particular types of contraceptives up to June last. Since then, the VAT rate of 20 per cent appropriate to those two items has been applied. There are no figures of the effect on VAT revenue but it is not thought to be significant.

Would the Minister agree that the entire incident appears to make an ass of the law? Would the Minister care to comment on the legality of the action of the Revenue Commissioners, in view of the law, in regard to the importation of contraceptives for sale? It appears to be the case that the importers made no secret of the fact that these contraceptives were for sale, for distribution to family planning clinics throughout the country, yet the Inland Revenue people imposed tax on these. It appears to make the entire legal position rather silly at present and seems to call for very urgent action indeed in reforming the law in respect of this.

My understanding is that the Revenue Commissioners did not regard the disposal of these contraceptives, after importation, as being by way of sale.

The distributors have made it quite clear that they never made any pretence at customs that these were for sale through the various outlets in the country.

That is not my information.

Why is it that importation is being stopped?

That is in another matter; it arises in connection with a particular company. I think there is a question relating to it. It is in connection with that particular company that this has happened. The position is that for quite some time—as I am sure the Deputy is aware—contraceptives were being imported, VAT was being paid on them and, as far as the Revenue Commissioners are concerned, their disposal, after importation, did not constitute sale. That position can and could continue.

Is it not a completely farcical situation?

Did the Minister give the amount of VAT collected?

No, I said there were no figures of the effect on VAT revenue but it is not thought to be significant.

Was there any consultation between the Department of Finance and the Inland Revenue prior to the seeking of an increase in VAT on these contraceptives?

Apparently this was a question of an incorrect application of a VAT classification in the case of two types of contraceptives. When the mistake was discovered——

It is permissible then to import some in certain circumstances and not in others? Is that true?

The position is that it is perfectly within the law to import contraceptives. It is not permissible, it is not lawful, to sell them.

In fact the position is that you can import them for distribution in whatever numbers you wish but if these are for sale the present law is that you cannot. It is an absurd situation.

It is no wonder they are at the Irish jokes.

Can the Minister say why different rates of VAT apply to different types of contraceptives?

That is a separate question.

One type I understand is classified as oral medicine which is zero-rated and the rest are not.

Why is the Minister for Health taking a back seat?

Order. Question No. 15.