Measure to close VAT loophole passed

First resolution A measure to prevent property developers abusing VAT laws was passed in the Dáil last night.

The Taoiseach introduced the first financial resolutions of the Budget. Mr Ahern said the abuse represented a "potentially significant loss" to the Exchequer, which in one housing scheme alone was estimated at €18 million. The measure came into effect at midnight and was a response to "certain developers who are failing to account for VAT on the sale of residential sites".

The Dáil also passed resolutions which increased the price of a packet of 20 cigarettes by 25 cents and diesel and petrol by five cents a litre. The increase in cigarettes is expected to yield €1.2 million to the Exchequer up to the end of this year and €59.7 million in 2004. Mr Ahern said the rise in cigarette prices would represent a 0.187 per cent increase in the consumer price index. However, the Opposition forced a vote on diesel and petrol price increases, which were described as anti-competitive.

Fine Gael's enterprise spokesman, Mr Phil Hogan, said such an increase was "anti-business, anti-employment and will contribute enormously to the cost base of employment".

He said diesel and petrol rises represented a €98 million cost to employers.

Labour leader Mr Pat Rabbitte, whose party also opposed the fuel increases, said the tax package was costing the Exchequer about €283 million and some €243 million would be recouped by diesel, petrol and cigarette increases alone.

The Green Party supported the resolutions, which were in line with their environmental policies.