THE MINISTER FOR Finance has dismissed suggestions that the VAT rate applied to ice-cream sold by ice-cream parlours should be reduced to the 9 per cent tourism rate.
Currently, VAT of 23 per cent is placed on the sweet treats sold at ice-cream parlours because they fall under the ‘Confectionery and Sugary Foods’ category.
In a recent parliamentary question, Kerry deputy Brendan Griffin argued that the rate could be dropped “in recognition of the labour intensive nature of the business” and ice-cream parlours’ “heavy dependency” on tourism.
As part of a Jobs Initiative, a second reduced VAT rate of 9 per cent came into effect on 1 July 2011. It covers certain goods and services mainly related to tourism, including restaurant and catering services, hotel and holiday accommodation, tickets to performances and cinemas, amusements, sporting facilities, hairdressing services and certain printed matter. Generally welcomed as a successful scheme, there have also been calls for it to be extended past the 31 December 2013 deadline.
Noonan said the proposal to maintain the rate will be considered ahead of the 15 October Budget.
However, in the case of ice-cream, he said the inclusion would lead to pressure to apply a similar reduction to the wider confectionery and sugary foods area which would be costly to the Exchequer.
“I therefore have no plans to change the VAT treatment of ice-cream sold by ice-cream parlours,” he said, pointing out that where ice-cream is provided as part of a meal by a restaurant or other caterer, the entire meal (including the ice-cream) is liable to VAT at the nine per cent reduced VAT rate.
Kerry and Dublin-based ice-cream connoisseurs Murphy’s believe the reduced rate could only be a good thing for businesses, customers and the tourism industry.
Speaking to TheJournal.ie, Seán Murphy said the reduced rate would bring Ireland’s ice-cream businesses in line with other nations.
“In terms of VAT rates and cost of doing business, we are not on an even playing field,” he explained, noting that the company are looking to expand to European destinations shortly.
“But specifically, in the context of tourism, you have people coming in from every country to every county. Once they get here, we can work on getting them back.
“The thing about ice-cream is that it showcases some of the stuff that is beautiful about this country. Several companies use fresh milk, fresh eggs and other locally-raised produce. The products feature what Ireland does really well. It makes sense to push these. Essentially our business is face-to-face with tourists.”
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