Seán Haughey
Question:193 Mr. Haughey asked the Minister for Finance if he will reduce the tax on soft drinks sold in pubs in order to reduce alcohol consumption; and if he will make a statement on the matter. [17742/04]
View answerTuesday, 15 June 2004
Questions (142)
Written answers
Soft drinks, fruit juices and bottled water are subject to VAT at the standard rate of 21%. Alcoholic beverages are subject to excise duties. VAT applies to alcoholic beverages at the standard rate. Under Annex H of the EU Sixth VAT Directive, member states are permitted to apply a reduced rate of not less than 5% to food and non-alcoholic beverage items. It would be possible therefore to apply our reduced rate of 13.5% to all soft drinks.
There is no evidence to suggest that if the VAT rate on soft drinks was reduced to 13.5% that consumers would benefit from reduced prices in pubs for such products. Such a VAT reduction, even if passed on, would result in a relatively small price change. In addition, a reduction in the rate of VAT on soft drinks would be costly to the Exchequer. Even if there was a reduction in the price of soft drinks, arising from a VAT change, there is no evidence that this would have any impact on consumption of alcohol, or encourage a move away from alcoholic drinks. I have no plans, therefore, to introduce the change proposed by the Deputy.