Irish Water Lobby Hits At Discriminatory Tax

by Jason Gorringe, Tax-News.com, London

22 January 2002

The Beverage Council of Ireland (no, nothing to do with Guinness - it's the representative group for the soft drinks industry) and its Executive Director Bernard Murphy have taken up the cudgels on behalf of the producers of bottled water, or more specifically in respect of VAT.

Mr Murphy says that it's anomalous that Ireland's very high VAT applies to bottled water, orange juice and soft drinks, but not to milk, tea and coffee.(after the increase at the last budget to 21%, the Republic's VAT rate is at 21% now the second highest in Europe). Every other EU member-state charges VAT on these other beverages - some at the same rate, others at a reduced rate.

For an industry that generates a spend of EUR500 million per year and VAT receipts of EUR80 million for the Exchequer, the imposition of this high rate on bottled waters, juices and soft drinks is totally unjustified, says Mr Murphy. Another example of the craziness of the current system he gives is that you can buy a packet of tea VAT free but that a can of iced tea carries the tax.

Adopting the clothes of a populist reformer, Mr Murphy declaims: "It is time to recognise that the economy and society we live in has moved on from the days when bottled water was seen as a 'luxury' good and soft drinks and juices were the exception, not the norm. There is no reason, other than outdated perceptions and tradition, to have bottled waters and soft drinks charged a VAT rate of 21 per cent."

"The Beverage Council of Ireland would like to see these basic, home-produced commodities treated in the same way as the imported ranges of tea and coffee that sit next to each other on our supermarket shelves. In 2002 it is outrageous that consumers of bottled water or fruit juices be charged a premium over those that choose to drink teas and coffees.

"There are so many reasons to eliminate VAT on soft drinks - impact on inflation, equity with other imported beverages, EU harmonisation, cheaper options for designated drivers and so on - but most obviously because its imposition is a throwback to a time, long since past, when having water out of a bottle rather than out of a tap was considered a luxury.

"Take your pick of reasons Minister, but let's get rid of this punitive anomaly that affects us all."

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