Why Vat reform makes sense

While there is growing speculation that the forthcoming budget might include income tax cuts, I think it is important that we consider reform of the Vat system instead.

Vat is unique in that it is hated by most of the political spectrum. The left hates it because it is regressive and unfairly hurts the poor. The right hates it because it suppresses commerce and drives down cross-border competitiveness.

Under the current Vat regime, oxygen, gum shields, safety helmets and incontinence pads are subject to the standard rate of 23%, while gold sovereigns for investment purposes, lobster and stockbroker’s fees are exempt from Vat. Membership of a golf club is exempt, but membership of a pitch and putt club is subject to 9% Vat. While dance lessons (including Irish dancing) are subject to 23% Vat, ballet is totally exempt. To rent and sit on a horse is taxed at 4.8%, but the luxury of sitting on a geriatric chair is taxed at 23%.