1,800 jobs at risk if food supplements VAT hike comes in, Minister warned

Finance Minister Paschal Donohoe

The Irish Health Trade Association (IHTA) has accused Finance Minister Paschal Donohoe of "running down the clock" and refusing to take action to prevent a VAT increase on food supplements which it says will destroy 200 businesses and 1,800 jobs.

The Revenue Commissioners is set to introduce a 23% VAT rate on food supplements from Friday next, March 1, a decision made by Revenue on December 27 last.

Commenting on the Minister’s refusal to meet the food supplement industry, IHTA spokesman, Alan Martin, said: “We urgently need the Minister to intervene and reverse a recent decision by the Revenue Commissioners to introduce a 23% VAT rate on food supplements which will threaten 250 local businesses with closure and put 1,800 jobs at risk. We are in a very dangerous position in our industry with imminent job losses and the people reliant on supplements having to face the harsh reality of a 23% increase.”

He added: "The Revenue Commissioners now want to introduce a 23% VAT rate on all health products. We have had a number of meetings with senior officials but nobody is able to explain the rationale behind this decision and why now.’’

An iReach survey commissioned by the IHTA found that 71% of Irish people buy vitamins, minerals and other food supplements all year round, with 73% of those regular consumers doing so to "maintain and improve ongoing adult health".

According to Dermott Jewell of the Consumers Association of Ireland, the health food industry should appeal directly to Minister Donohoe: “We would consider that an appeal from him would hold a significant degree of weight and also as a reduction in VAT was proposed and initiated for a number of years by a former Minister for Finance. It would be best to seek his consideration of review of the consequences of the March 1 change for, at least, a postponement pending discussions with Revenue.”

That is a very significant sum of money, especially for those on pensions and fixed income who are trying to keep well.

In a statement, Revenue said the standard rate of VAT applies to all food supplements, but that it has operated what it describes as a 'longstanding concession' that permitted certain supplements like vitamins, minerals and fish oils to be zero-rated.

It accused certain businesses of abusing the concession by extending the zero rating to other products.

“The operation of the current concession has become extremely problematic because of efforts by certain businesses in the industry to exploit the concession to extend zero rating way beyond the scope permitted by Revenue,” said the statement.

“These businesses consistently challenge Revenue guidance and Revenue decisions on the VAT rating of products and Revenue is very concerned that this action is resulting in unfair competition between compliant and non-compliant businesses," the statement added.

This story was amended on February 26, 2019

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