Shops' claim of not passing on VAT hike 'misleading'
Published 03/01/2012 | 05:00
SUPERMARKETS have been accused of misleading customers by advertising their intention not to pass on VAT increases this week -- even though most food products don't incur the tax.
A number of supermarkets have boasted they are not applying the 2pc VAT hike, which came into effect on January 1 and pushed the rate to 23pc.
However, a substantial amount of food products have never had VAT applied and there is no charge to pass on.
The Consumers Association of Ireland (CAI) believes the move to reassure customers is nothing more than a cheap marketing ploy.
CAI chief executive Dermott Jewell said the approach was disingenuous.
"They really are taking a very clear marketing opportunity here to make themselves look very positive and customer orientated when the actual reality is they have very little work to do because the vast majority of (food) products aren't liable to VAT," he said.
"They are creating the illusion that it's a better move to go to them because they are going to absorb the VAT increase but in reality there is really no VAT increase to absorb.
"The entire element of VAT is very confusing to customers. It's so cynical and very frustrating," he added.
Most basic foodstuffs like bread, butter, tea, meat, vegetables and milk avoid the charge.
Processed foods like flour and egg-based products including cakes, crackers and biscuits incur a reduced rate of VAT of 13.5pc.
The standard rate, increased to 23pc, includes more luxury end or 'non-essential' products like frozen desserts, confectionery, soft drinks and alcohol.
In the immediate aftermath of Finance Minister Michael Noonan's announcement, Tesco, Lidl, Aldi and Marks & Spencer all moved to dispel concerns.
Tesco has already posted in-store notices announcing: "Good news. We will not be passing on the VAT increase on food or clothing."
However, it will apply to other categories such as non-food items like washing up powder and household wears. Last night, it dismissed concerns raised by the CAI.
"There are large proportions of food products that have VAT at the larger rate," a spokesman said.
"I don't know what the proportion is but the non-essential food does have VAT at the higher rate.
"This is providing a saving to customers and the customer will benefit."
Both Lidl and Aldi have advertised heavily that they would not pass on the hikes.
Aldi would not comment last night and Lidl said only that its "initiative on VAT is a further measure in support of our customers' pockets".
Dunnes Stores was also unavailable for comment but one store manager indicated that VAT hikes would be introduced on a phased basis over the coming week.
Musgrave -- which controls the Superquinn, Supervalu, Centra, Mace and Daybreak stores -- was also unavailable for comment.