VAT rates, food and the environment

VAT on food is a regressive tax

Sir, – Justine McCarthy calls for reform of the VAT system to reflect the true cost of goods and services to the environment (“To sustain the world we need to reset our economic mindset”, Opinion & Analysis, July 28th). I would extend this notion of VAT reform to include the social and economic pillars of sustainability and to reflect the UN Sustainable Development Goals, specifically relating to VAT on food.

In 2020, I was called a “vociferous critic” of the 13.5 per cent VAT rate on restaurants (“Michelin-starred Mews joins growing number of Irish restaurant closures”, Food, January 10th, 2020) Now, happily divorced from the restaurant business, I remain a staunch critic as a consumer.

The special rate of 9 per cent is consistently labelled as VAT on the “hospitality industry”. One of the many absurdities of the special rate is that it lumps in hotels, hairdressers, cinemas and concerts with the basic daily need of prepared food. Any increase in VAT on food will increase the cost of living for almost every consumer.

VAT on food is a regressive tax. Historically, this has been acknowledged within the system by a zero-rate on cold groceries. This two-tier system does not reflect modern consumption patterns and serves to protect the true villains of food sustainability: supermarket chains and large food processors. It also results in the illogicality of a cold takeaway sandwich having a zero-rate, while a toasted sandwich has VAT applied.

READ MORE

VAT on food hits those who can least afford it hardest. It penalises those who do not have appropriate kitchen or storage facilities at home. It presents a barrier to nutrition for children in poorer households and increases the price of school and college meals. It forces small independent food businesses to sacrifice quality to meet consumer demands on price, and gives fast-food chains a market advantage.

A sustainable food system in Ireland would make locally produced, nutritious, environmentally sensitive food available to every consumer at a fair price. Artisans, independent restaurateurs, café owners and primary producers should be able to make a sustainable income by purveying sustainable food.

My vociferous argument for progressive VAT reform is not to retain the reduced 9 per cent rate, but to recognise “good” food as a basic human need and abolish VAT on food entirely. If there must be two tiers of VAT on food, let those that damage our health and our environment pay the price. – Yours, etc,

ROBERT COLLENDER,

Ballydehob,

Co Cork.