Irish bakeries have hit out at plans to change VAT rules so that products including bagels, speciality breads and croissants would be liable to tax at 13.5%.
The Revenue decided last month that many bakery products, which had previously been zero-rated, were so far-removed from standard loaves of bread that they should be liable for the 13.5% reduced rate of VAT. Products in the new rate include speciality breads, such as garlic bread, onion bread and fennel bread, as well as brioche.
Bakers claimed the move would hurt their businesses and would inevitably lead to price hikes for consumers. The concerns were put to Minister for Finance Michael Noonan last month.
At The Bread Crumb craft bakery in Kenmare, Co Kerry, which makes and sells a wide range of croissants, owner Manuela Goeb criticised the rise in VAT. "It won’t raise any extra money for the Revenue because people will just stop buying the products if they go up in price," she said. "Alternatively, bakers will just stop making them, which is probably what we will do."
A spokesman for the Irish Bread Bakers Association said: "We are very concerned about any situation where the price of bread may increase. We are engaging with the relevantagencies to ensure that modern breads that the consumer enjoys remain at the 0% rate of VAT."
Information published on the Revenue’s website to clarify the reasons for the change, said that the products to be taxed did not "conform to the ingredient definition of bread".
Karen Mulcahy from The Vat Consultancy told British Baker that the changes to Irish VAT laws were unlikely to affect British rates of tax.