Deirdre Clune
Ceist:233 Ms Clune asked the Minister for Finance the reason VAT is imposed on soft drinks, bottled water and fruit juice and not on tea and coffee; and if he will make a statement on the matter. [10143/02]
Written Answers. - Tax Code.
The basic position as set out in paragraph (vii), Second Schedule, VAT Act, 1972, as amended, is that food and drink in general is zero rated and this applies in general to basic food items. Food products sold in a retail outlet can be subject to zero, 12.5% or 21% rate depending on the type of product. Tea and coffee sold in a retail outlet are zero rated but are subject to VAT at 12.5% when purchased as part of a meal in a restaurant or similar establishment or from a vending machine or purchased for "take out". Soft drinks, fruit juice, bottled water and other similar products are subject to 21% wherever they are purchased. Tea and coffee are considered to be basic food items whereas soft drinks, juices and bottled water are not considered as such.
Prior to 1992, however, while soft drinks in general were subject to the standard rate of VAT, certain bottled waters, fruit juices and sports drinks were at 0%. These were made subject to the standard rate of VAT of 21%, however, from 1 November 1992. The change in the law corrected a competitive anomaly. The amendment in the law also coincided with the removal of excise duty on bottled water. Under EU VAT law it is not possible to zero rate goods and services which were not zero rated before 1 January 1991. Thus it would not be possible to remove VAT from soft drinks to which the standard VAT rate applied prior to that date. While some fruit juices and bottled waters continued to be zero rated up to 1 November 1992, the application to these products of the standard VAT rate from that date prevents the reintroduction of a zero rate of VAT. In general, it is the position that even if a product was zero rated after 1991 but subsequently standard rated it is not possible to reintroduce the zero rate for the product. Even if it were possible to zero rate these goods, it would reintroduce the competitive anomaly between water and juices and soft drinks removed in 1992. I have no plans therefore to change the current VAT treatment of such products.