Many stores promise not to pass on VAT increase

In the first good news for consumers in ages, many large supermarkets and stores are promising not to pass on the 2% VAT increase in January.

In the first good news for consumers in ages, many large supermarkets and stores are promising not to pass on the 2% VAT increase in January.

In Leitrim Tesco, Lidl and the new Aldi store under construction have all said they will not ask shoppers to pay the top-rate VAT rise from 21% to 23% announced by Finance Minister Michael Noonan in this month’s budget.

The move is good news for shoppers but it could be difficult for smaller retailers to match.

However, some prices will still rise in January, as some retailers are only freezing the VAT rate for specific types of items.

Tesco said it would not pass on the new 23% VAT rate to food or clothing, but the increased rate would apply to non-food groceries such as washing powder and to household goods.

Most food products are zero-rated for VAT or taxed at the lower 13.5% rate, but luxury products such as chocolate, crisps, soft drinks and bottled water are charged at the higher rate.

Meanwhile, Lidl said in a statement that its prices on all products on December 31 would not change as a result of the 2% increase in VAT.

“Therefore, when Lidl stores reopen on January 2, customers can enjoy the same prices as before,” it said.

To read the full story see this week’s Leitrim Observer.