Overall change to VAT prompts strong criticism

MINISTER for Finance Brian Lenihan’s debut Budget brought mixed news in terms of value added tax with his headline move prompting strong criticism from industry.

While the minister announced that the overall standard VAT rate is set to increase by 0.5% as of the beginning of December — from its present level of 21% to 21.5% — he emphasised that vast swathes of everyday expenditure will be unaffected by the changes.

The headline measure — which means Ireland has one of the highest VAT rates in Europe, outside of the Scandinavian countries — is aimed at yielding savings of €208 million for the Government next year and €227m in an average full year.