Betting and supplement VAT
Deputy Howlin argued Government tax changes were harming small businesses, including bookmakers and health stores. Minister Donohoe defended his budget supports for SMEs and said Revenue did not accept the Deputy's analysis; he clarified that regulated health products would keep a 0% VAT rate while others would move to 13.5%.
The Minister for Finance, Deputy Donohoe, seems to have it in for small family-run businesses. Last year, we warned him that betting duty on turnover would put such small firms out of business, as 2% of turnover was greater than their profits in some cases. That is what happened. In this year's budget, the Minister had to introduce a new relief in recognition of the difficulties experienced by small independent bookmakers. We told him last year that this would happen, but unfortunately, some have closed in the interim.
The Minister is now being warned that small independent health stores will also close, leaving more boarded-up shops in our towns and villages if he increases the rate of VAT on food supplements to 13.5% in the Finance Bill as he promised.
We simply cannot allow that to happen. I ask the Minister to provide clarity now. Will he preserve jobs by defining food supplements as food, with a 0% VAT rate, as has been the case for more than 40 years? With the pressure Brexit is putting on small firms and family-owned businesses closing down all the time, this is not the time for it to happen. Will the Minister preserve the 0% rate of VAT on food supplements?
Comment on this
I would have hoped the Deputy would recognise the measures I introduced in the budget to support small and medium-sized companies. Those measures have been recognised by many of the firms' representatives as delivering the change for which they were looking.
Comment on this
On Deputy Howlin's point about food supplements, the only problem with his analysis is that the Revenue Commissioners do not agree with it.
Comment on this
There have been regional difficulties.
Comment on this
The law determines the matter, not the Revenue Commissioners.
Comment on this
The Revenue Commissioners have indicated that in the absence of any change, they will adjust the VAT rate to 23% on 1 November. This time last year Deputy Howlin and others were calling on me to prevent that from happening. I have now made it clear that those products that are regulated by the agencies of the Department of Health will retain the 0% rate. The VAT rate of products without that status will change, but it will not change to 23% as envisioned last year. Instead it will move to 13.5%.