Trouble brewing on tax or a storm in a teacup?

When is tea not tea? When it’s a herbal tea, according to the taxman.

The Revenue Commissioners is now dividing teas into tea and non-camellia-based herbal infusions. Those teas that do not contain dried leaves from the camellia plant will be subject to a 23% Vat charge.

Revenue has clamped down on health food wholesalers and is forcing a 23% tax rate onto all herbal teas, or non-camellia-based herbal infusions.

President of the Irish Association of Health Stores, Jill Bell, who owns Well and Good in Midleton, said customers would suffer.

“This could be the thin edge of the wedge,” she said.

“To our customers this is a big issue, because people have become used to buying high-quality herbal tea and then they have to deal with this sudden imposition of 23% Vat.”

The issue was raised by Fianna Fáil TD Colm Keaveney, who asked Finance Minister Micheal Noonan if he could clarify the matter.

Mr Noonan said the Revenue Commissioners has decided to follow the strict interpretation of tea.

Under this interpretation, classic black tea, or breakfast tea, will still enjoy a Vat rate of 0%. Certain food stuffs were given a Vat rating of 0% if there were clearly defined social reasons for the exemption under an EU Vat directive.

In Britain, this led to a long-running court battle over whether the Jaffa Cakes were biscuits or cakes.