Beverage Council calls for VAT-rate reduction on drinks

The Beverage Council of Ireland (BCI) wants the Government to reduce the VAT rate on bottled water, fruit juices and soft drinks in next week’s Budget from its current level of 21% to 13.5%.

The BCI, which is the representative body of the bottled and packaged beverage industry in Ireland, argues in a comprehensive pre-Budget submission to the Minister for Finance that the current VAT rate on these products is “unjust and discriminatory”.

Chief executive of the BCI, Mr. Bernard Murphy, points out that Ireland and the UK are the only member EU countries “to charge VAT on bottled waters, fruit juice and soft drinks but not on other non-alcoholic beverages such as tea, coffee, and milk”.

The BCI contends that these beverages are foodstuffs just like these other beverages. They are subject to all the legislation, standards, contents labelling and safety regulations that apply to other foodstuffs.

“However, whereas food is zero-rated, the Beverage Council of Ireland accepts that for technical reasons it would not be feasible to argue for a zero rate on soft drinks. But we do contend that the case for the lower 13.5% rate is incontrovertible," Mr Murphy said.

A reduction in the VAT rate from 21% to 13.5% would reduce the retail price of bottled water, fruit juice and soft drinks by 6% and the beverage companies have undertaken to pass on this price reduction and saving in full to consumers.