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Opposition calls on government to explain 2 per cent VAT rise report

The Department of Finance has insisted that no decisions have been made but a document in the German Bundestag says different.

Updated 3.50pm

THE GOVERNMENT WILL raise VAT by two per cent in the forthcoming Budget it is reported this afternoon.

Reuters reports that the government will increase Ireland’s top rate of sales tax by two per cent. This will be part of attempts to raise €1.6 billion through increased tax measures with a total €3.8 billion of an adjustment expected.

The report cites a document that was presented to the budget committee of the German lower house of parliament earlier this week which says that VAT will rise to 23 per cent, generating €670 million in revenue.

Fianna Fáil said the matter needed to be clarified and questioned why it appeared the German Bundestag had details of the 6 December Budget before the Irish people. Sinn Féin called on the Taoiseach to explain the details of his meeting with German chancellor Angela Merkel yesterday in light of today’s report.

Speaking on RTÉ’s News at One Minister for Public Expenditure and Reform Brendan Howlin said that “the decision hasn’t happened” but that it was part of the Memorandum of Understanding (MoU) with the EU and IMF as part of Ireland’s bailout that VAT would rise.

Howlin said the “timing might be somewhat different”.

In May, the MoU stated that Ireland would increase VAT by one per cent in 2013 and another one per cent in 2014. However, July’s MoU did not contain any reference to any VAT rise. It is not clear why this is the case.

How and why documents containing the VAT reference ended up in the German lower house of parliament is also not entirely clear.

Howlin told RTÉ: “I have no idea, the basis of the discussions in the German Bundestag.”

A spokesperson for the Department of Finance was also unaware as to how it had occurred and described the report of a VAT rise as “speculation” insisting “no decisions have been made in relation to the Budget”.

The Fianna Fáil spokesperson on finance Michael McGrath has said that Finance Minister Michael Noonan needs to clarify the matter today as to why the German parliament was reportedly given details of a potential VAT increase before the Irish people.

He said in a statement:

According to the reports, members of the German parliament have been given details of the Irish budget three weeks before the Irish parliament and the Irish people.

If this proves to be true, it would be a staggering and unprecedented breach of faith with the Irish parliament and Irish people on budget plans.

It would represent a fundamental breach of established protocols in relation to the disclosure of budgetary measures.

The Minister now needs to clarify the precise nature of the budget information which has apparently already been given to German parliament. In addition, for what purpose was the information presented to the German budget committee yesterday?

Sinn Féin’s finance spokesperson Pearse Doherty said that the Reuters story showed that “Angela Merkel really is pulling the strings”.

“Enda Kenny needs to come into the Dáil and give a report on his meeting with Angela Merkel including exactly what details and documents her gave to his German counterpart,” he added.

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About the author:

Hugh O'Connell

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