THE PRICE of nicotine patches in the Republic of Ireland cannot be lowered to match costs in Northern Ireland because of EU rules on VAT, Michael Noonan has said.
Patches in the North are sold at a VAT rate of only 5 per cent – while the same product in the Republic is levied at a rate of 23 per cent.
Noonan said an EU directive on VAT rates meant it was impossible for Ireland to follow the UK’s lead and lower the rate of 5 per cent.
His explanation came after Labour backbencher Ann Phelan asked if the Republic could follow Britain’s lead and cut the price of patches in an effort to encourage people to quit smoking.
However, while other nicotine products like chewing gum, inhalers and tablets are VAT-free – as they are classed as oral medicines – patches have to taxed at the full rate, which in Ireland’s case is 23 per cent.
In response to written Dáil questions, Noonan said the EU VAT directive only allowed countries to impose two ‘lower’ rates of VAT – which in Ireland’s case were 13.5 per cent, a rate for fuel and electricity, and 9 per cent for tourism-related activities.
In order to match the UK’s 5 per cent rate, therefore, one of the two lower rates would have to be reduced.
A separate VAT rate of 4.8 per cent applies to livestock.
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