THE VAT IN IRELAND
As I write this Grassroots Corner, we have just left Ireland. Ireland has a Value Added Tax (VAT) like those in its counterparts in the European Union. I make a point of looking at my sales slips when I am in a country like Ireland.
On our excursion to Dublin, we visited the Jameson Distillery, founded by a Scotsman who moved across the Irish Sea. We took the guided tour, complete with a tasting. We learned about distilling, malting, and maturation, and how the same factory makes whiskey, bourbon, and sherry.
Our tour guide.
Of interest to FAIRtax supporters, at the end of the tour, we encountered the anticipated gift shop on the way to the exit. There, we bought the “copper bundle,” consisting of coasters, a lemon/lime squeezer, a copper holder, and a sample of Jameson’s triple-distilled Irish whiskey.
The Irish sales slip resembles its EU counterparts and is more detailed than the UK's.
The price for three sets of the Copper Bundle is €75.00 (about $87 U.S.). The slip discloses the tax-exclusive rate of 23% (i.e., based on the net sales price; the FAIRtax, by contrast, is tax-inclusive, i.e., based on the total cost of the good or service, including the tax, facilitating a comparison to the taxes it replaces), the net price of €60.98, the Value Added Tax of €14.02, and the sales price of €75.00. You will note that the net price is designed to ensure that the price the consumer pays, including tax, ends in an even number.
Unlike in the United States, where state sales taxes are added at the cash register, the price quoted on a sign, menu, poster, or store shelf in Ireland is the price the consumer pays.
Europeans who tour the U.S. often complain when they pay more at the cash register than the price quoted on the shelf. At first, they think the store is pulling a fast one on them.
Maybe the current U.S. practice regarding state sales taxes isn't so bad, though. Even though the VAT in Ireland is fully disclosed on the receipt, few pay attention to it. When the tax is quoted at the cash register in the United States, the customer starts to get an inkling about how much the state government costs. Do we want the FAIRtax to be paid in addition at the cash register?
According to CoPilot, www.irishtaxation.ie, and https://irelandvatcalculator.ie/, Ireland has four main VAT rates, a zero rate, and exemptions. Here they are:
- Standard rate – 23%: This rate applies to most goods and services, including: Electronics, appliances, furniture, clothing, footwear, cosmetics, watches/jewelry, motor vehicles, tires, and Jameson “copper bundles.”
- First reduced rate – 13.5%: This rate commonly applies to takeaway and in‑house food (hot or cold), coffee, tea, printed materials, live horses, fuels, building materials, medical/veterinary services for animals, construction services, certain food supplements, waste disposal, child safety car seats, livestock feed, non‑oral contraceptives, menstrual hygiene products, restaurant meals, cafes, bars, and some catering services.
- Second reduced rate – 9%: This rate typically applies to printed periodicals (magazines, newspapers), and electronic publications (e‑books, e‑periodicals) if not primarily advertising or mainly audio/video content
- Third reduced rate – 4.8%.: This rate applies to livestock (including farm animals and greyhounds).
- Zero‑rated – 0%: This “rate” applies to goods and services deemed essential or exempt from VAT, such as, staple foods (bread, butter, sugar, fish, chips, vinegar), children’s clothing, and exports of goods and services.
- Exempt supplies: Certain services are exempt from VAT entirely, including healthcare, education, financial services, and residential rent (rules vary by country) taxratesbycountry.com.
These rates are set under Section 46 of the Irish VAT Act and can vary by product/service category. As with American state sales taxes, these varying rates make tax calculation complex and sometimes uncertain.
With the FAIRtax, the rate is uniformly applied to all services and new tangible goods sold at retail, without fear of favor. The FAIRtax addresses the problem of taxing food and essentials with the Family Consumption Allowance, or Prebate.
If you visit a country with a VAT, I would love to hear from you.
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