Food and medicine face VAT hikes to cut costs

FOOD and medicines could be hit by major VAT increases under emergency measures drawn up by the Finance Department which would see health, welfare and school spending slashed.

Briefing documents compiled by senior department officials for Finance Minister Michael Noonan warn the economic situation is worse than feared at the last budget and outline drastic options for righting the state’s financial imbalance.

Scrapping the zero VAT rating for food, oral medicine and books, as well as pushing such items up to a new band below the standard rate, is one controversial revenue-raising measure outlined in the heavily censored papers released under Freedom of Information.