Full VAT milk and coffee

Full VAT milk and coffee
(Date:25 July 2011)

The recent decrease in the VAT rate for certain food prodcts has come as a welcome boost for the restaurant sector, which is feeling the pinch a little.

A cut from 13.5% to 9% for some tourism related goods and services was passed into law on the 1st of this month, meaning that areas such as restaurant and catering services; hotel and holiday accommodation; admissions to cinemas, theatres, certain musical performances etc. have all benefited.

A notouriously complicated sector when it comes to tax, the food and drink area has now a few different tax bands, and a full list of what this reduction applies to can be found here, which includes "the supply of food and drink (excluding alcohol and soft drinks) in the course of catering or by means of a vending machine" and "hot take-away food and hot drinks", so coffee is a fine example.

Baked goods, for example, will be staying at the 13.5% level, so your morning coffee and muffin will now have different tax bands!

In theory, this drop should have large repercussions for you as a consumer, but it seems that the rate hasn't been passed on by some, and with good reason in many cases too.

Quite a few restauranteurs and cafe owners have gone public, and stated that they simply can't afford to pass on the cut, due to the unprecedented economic conditions. This is particularly true in the case of hot drinks, where the price of coffee beans is at an all time high, with milk also very high in price currently too (don't even mention anything about the incoming water rates!)

In an article in today's Pricewatch column in the Irish Times.a spokesperson for an Irish coffee chain states that "the cost of coffee, chocolate, milk, bakery products, paper cups and other disposables has all increased in price over the past year". Many owners are stating that they have absorbed these, and other increases in the past few years, in order to keep prices at a fair level for their consumers, and so the VAT drop is some sweet relief to dropping margins.

However, there have also been quite a few angry articles on the issue from the embattled consumer, and there is definitely a feeling that restaurant owners keeping the cut for themselves may be shooting themselves in the foot when it comes to goodwill.

We feel that there's definitely merit to both arguments, and we'd like to get your opinion on things.

Do you feel that you, as a consumer, have reaped the rewards of a reduction that was meant to stimulate tourism in the country? Have you seen or experienced a reduction in VAT in your lunch local? Have you heard of it not being passed on, or taken this up with a cafe/restaurant owner, and gotten a response? Let us know in the comment box below, or by email at hungry{at}mylunch.ie

Oh, and here's a Facebook page which will be keeping an eye on who passes on the cut.

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Full VAT milk and coffee

Full VAT milk and coffee (Date:25 July 2011)

Full VAT milk and coffee
(Date:25 July 2011)