GOVERNMENT and opposition TDs have demanded that professional fees in divorce cases be exempt from VAT, but have been told that this would contravene EU law.
During debate on the Family Law (Divorce) Bill by the Dail Committee on Legislation and Security yesterday, the Minister for Equality and Law Reform, Mr Taylor, said the State was bound by EU law which stipulated that professionals were obliged to register for VAT.
The Fianna Fail spokesman on equality and law reform, Dr Michael Woods, said that when divorce became legal there would be a backlog of some 10,000 to 15,000 cases to be dealt with over the next five years.
This would lead to a VAT take of at least £6 million for the State on professional fees of £30 million. The EU received 1.5 per cent of all VAT collected here. "The Community actively supports the concept of the family, but this would be one area where we could actively help those in difficulty," he said.
The Progressive Democrats' spokeswoman on justice, Ms Liz O'Donnell, said a VAT exemption in this case was a very sensible proposal. "The punter whose marriage is breaking down has to pay 21 per cent VAT on all professional fees. Litigation costs are far greater for an individual than for a company which can write off its VAT" she said.
The chairman of the committee, Mr Charles Flanagan (FG), said that if a special case could be made for farmers and their sons something could be done for those bearing the brunt of marriage breakdown.
Mr Taylor said he would consult the Minister for Finance regarding the stamp duty aspect and deal with the issue at the report stage.
A number of TDs raised difficulties that would be faced in enforcing payments in divorce settlements. Mr Taylor said a lot would rest with the judiciary and a firm approach by them could bring about improvements.
He accepted there was difficulty in enforcing such payments, but could not accept a Fianna Fail amendment which proposed interest payments on defaulted payments. This was a difficult area which left people struggling even now before divorce was introduced.
Dr Woods said the ultimate sanction for defiance of a court order was imprisonment, but that was unrealistic in view of the prison situation. Mountjoy Prison had a capacity for 430 offenders, and this week there were 600 prisoners there. Talking about imprisoning defaulters was meaningless.
Ms O'Donnell said that because of the emotional warfare associated with marriage breakdown maintenance payments were often used as a weapon. Maintenance debtors could be a serious problem.
Mr Eamon Walsh (Lab) said a mechanism should be in place to ensure that people lived up to their responsibilities. People could and did frustrate and delay payments.
Mr Taylor promised to consider the issue of enforcing payments before the report stage of the Bill, which passed its committee stage. The report stage will be taken when the Dail resumes in the autumn.