Supermarkets "mislead" Irish customers over VAT hike

Tesco, Marks & Spencer, Lidl and Aldi have all advertised about their intention not to pass on the 2% increase in VAT to 23%, which came into effect in Ireland on 1 January.

But, according to Irish paper the Independent, the Consumers Association of Ireland (CAI)  believes the approach is disingenuous, as most food products are not liable to VAT.

CAI chief executive Dermott Jewell said:”They really are taking a very clear marketing opportunity here to make themselves look very positive and customer orientated when the actual reality is they have very little work to do because the vast majority of (food) products aren’t liable to VAT.

“They are creating the illusion that it’s a better move to go to them because they are going to absorb the VAT increase but in reality there is really no VAT increase to absorb.

“The entire element of VAT is very confusing to customers. It’s so cynical and very frustrating.”

Basics such as bread, butter, tea, meat, vegetables and milk are not vatable, while processed foods like flour and egg-based products incur a reduced 13.5% VAT rate.

Tesco has said that it will not be passing on the VAT increase on food or clothing. A spokesman said: “There are large proportions of food products that have VAT at the larger rate.

“I don’t know what the proportion is but the non-essential food does have VAT at the higher rate.

“This is providing a saving to customers and the customer will benefit.”

Aldi declined to comment. Lidl said the “initiative on VAT is a further measure in support of our customers’ pockets”.