Government VAT increases pile further pressure on prices and inflation
The Government decision to revert back to the 13.5% VAT rate from 1 September has been widely criticised by business groups who say it will pile further pressure on business and customers who will have to pay higher prices for goods and services.
Despite last minute appeals from business organisations, the increase went ahead.
The Government extended the lower rate for the final time in February. It made the decision after an economic assessment by Government officials found there was no economic case for any further extension. Government ministers have since consistently ruled out any further extension to the lower rate, because it is considered to be both regressive and costly.
The extension is estimated to have cost the Exchequer €300m in tax revenue foregone.
The 13.5% rate was lowered to 9% in November 2020 to help stimulate activity in the tourism and hospitality sectors during the pandemic and was extended in May of last year, as well as in February this year.