FG calls for clarity on trade as VAT scam distorts figures

The Government should immediately clarify the extent to which Ireland's trade performance is being distorted by what appears to be a massive VAT scam, according to Mr Richard Bruton, Fine Gael finance spokesman.

Central Statistics Office (CSO) trade figures have shown a sharp decline in exports and imports of electrical machinery in the early months of this year. At least part of this decline appears to relate to the ending of a VAT fraud scheme, based in Britain but involving the moving of goods into and out of the Republic to facilitate VAT evasion. This is believed to have inflated the export and import figures in 2002.

The CSO figures showed that in the first four months of this year, exports and imports of electrical machinery declined by €6.1 billion compared with the same period in 2002, according to a statement from Mr Bruton. In its release of the figures, the CSO referred to changes "in the pattern of distributive-type trade", with Britain.

"The Government must establish exactly what has been going on as a matter of urgency, and it must also immediately give assurances that there are no other areas of trade where Ireland can be used to facilitate similar scams," Mr Bruton said. The failure of the CSO and the Minister for Finance to explain this drop in trade in a specific sector was worrying, he added.

Overall, the value of exports fell by 19.8 per cent in the first four months of the year, compared with the same period last year, with a 47 per cent drop in exports to the UK.

A CSO spokesman yesterday said there were no plans at this stage to revise the trade figures. The figures were based on written returns from traders which came to the CSO via the Revenue Commissioners, he said, and the CSO had no proof that any particular returns were fraudulent. They would, of course, assess any new information in this area as it came to light, he added.

The Revenue is believed to have been co-operating with the UK counterparts in combating the fraud, which has led to some revisions in UK official economic statistics. Because the VAT fraud inflated both exports and imports for a period, it will not have any significant impact on overall national output growth figures as it does not appear to have seriously affected the trade surplus.