WITH higher taxes and Budget cutbacks squeezing us at every turn, we have to get inventive about saving money.
We all know we should shop around -- but what about the tax that bumps up the price of your everyday goods by as much as a fifth? This tax, Value Added Tax (VAT), is included in the price of many of the goods you buy in your local supermarket or grocery shop -- and it's also lobbed onto your restaurant and cafe bills.
There are two VAT rates -- 13.5 per cent and 21 per cent. Furthermore, the higher VAT rate is due to be increased to 23 per cent by 2014 under the Government's four-year plan. However, as VAT isn't charged on everything, you could save yourself a small fortune simply by being clever with your shopping and meals out.
"Different VAT rates apply to nearly the same product," says David Fitzsimons, chief executive of Retail Excellence Ireland. "Sandwiches eaten in versus taken out have different VAT rates, a bun with chocolate has a different rate to a bun without and a banana has a VAT rate that is different if it is liquidised into a smoothie."
Stop your sweet tooth flooding the taxman's coffers by avoiding the cheesecake and tiramisu and opting for croissants and jelly instead.
As you pay 13.5 per cent VAT on most of the cakes and desserts you pick up in your local supermarket or bakery, about €1 of each €7 spent on doughnuts, banoffi pie -- or whatever your particular weakness is -- usually goes straight to the Revenue. There are some exceptions. You don't pay any VAT on plain, butter or chocolate croissants. While sponge-based trifles are hit with 13.5 per cent VAT rate, buy a custard-based or cottage trifle and you'll avoid the tax. If you're content with jelly and ice cream, you won't pay any VAT on jelly. Sadly though, about a fifth of the price tag on your ice cream includes VAT. The only time you'll avoid the 21 per cent VAT on ice cream is if you order it in a restaurant or canteen -- but even then, the 13.5 per cent rate kicks in.
The best way that sweet tooth of yours can beat the taxman is if you take up baking. Instead of seeing a few euro of the money spent on luxury sticky toffee pavlova each week go on tax, buy your ingredients.
You don't pay any VAT on eggs, sugar, golden syrup or strawberries. If it's Baileys cheesecake that floats your boat, you won't pay any tax on a cheesecake mix -- as long as it doesn't contain the base. If you're really imaginative and can bake a cheesecake base that's not made of digestive biscuits, you may be able to avoid paying any VAT at all on the ingredients for your home-made cheesecake. Otherwise, you'll pay 13.5 per cent on your pack of digestives.
TAKE THE PLAIN BISCUITS
If you're any kind of a biscuit fan, you'll save a few bob by avoiding anything that's chocolate-covered.
"Plain biscuits are taxable at 13.5 per cent, whereas chocolate-covered biscuits are taxed at 21 per cent," says Dermot O'Brien, principal of the VAT consultants, Dermot O'Brien & Associates.
One of the few exceptions is Jaffa Cakes. As the Revenue Commissioners say that Jaffa Cakes are "regarded as a cake because the moisture content is more than 12 per cent", the VAT rate on them is 13.5 -- rather than 21 -- per cent.
Even chocolate-covered nuts will cost you dearly. "Unsalted, unroasted nuts are exempt from VAT," says Mr O'Brien. "Cover them in chocolate and they become liable to 21 per cent VAT."
TAKEOUTS AND SIT-DOWN MEALS
Did you know that you will pay more for the same food if you eat it at your local cafe or delicatessen, rather than take it away -- and that a cold meal will cost you less than a hot meal?
"Cold food, such as a sandwich, is exempt from VAT," explains Mr O'Brien.
If facilities are provided to consume the sandwich on the premises, it can attract 13.5 per cent VAT. There is no VAT on a frozen pizza sold in a supermarket. The same pizza, if heated, incurs VAT at 13.5 per cent.
Unless you are a patient in hospital or a schoolchild getting a school meal, you usually pay 13.5 per cent VAT on sit-down meals. If you order wine or minerals with your meal, your drinks bill includes 21 per cent VAT.
If you order your confectionery as part of a meal in a restaurant or cafe, you'll pay 13.5 per cent VAT instead of the 21 per cent you pay on confectionery bought in supermarkets -- unless you're only buying a cuppa, that is.
"Where confectionery is sold with only tea or coffee, the 21 per cent rate applies, as tea or coffee is not considered to be a meal," say the Revenue Commissioners.
If you eat out a lot, tell your restaurant that you'd prefer to tip them personally, rather than have a service charge included in your bill. Otherwise you'll pay 13.5 per cent VAT on the service charge.
If you're fond of smoothies, buy your own fruit and blender and make your own. You don't pay any VAT on fresh fruit, such as bananas or strawberries. But if you buy that fruit in a smoothie, you pay 21 per cent on it -- unless more than half of your smoothie is made up of milk or yoghurt, in which case no tax is charged.
Keep your baby snug without paying tax by buying a baby sleeping bag instead of a baby blanket. You don't pay any VAT on baby sleeping bags "provided they have openings for arms to go through and are described, labelled, marked and marketed as children's or baby's clothing," according to the Revenue. However, you pay 21 per cent on baby blankets.
Avoid the 21 per cent on purified bottle water for babies by giving your baby cool boiled water instead.
Baby drinks that are rich in vitamin C are not liable to VAT as the taxman considers them a "food" rather than a "refreshment".
If you're sending your child to a creche or childminder, your childcare fees are exempt from VAT.
THE IRISH SUMMER
If the recession has forced you to stay at home this summer, see if you can fit into a child's raincoat instead of an adult one before forking out for new raingear. You pay 21 per cent VAT on adult's rainwear, but none on children's rainwear.
If you can fit into your kid's beach shoes, even better. "Shoes for a 10-year-old are not taxed," says Mr O'Brien. "Shoes for an 11-year-old are taxed at 21 per cent -- probably the most bizarre distortion of all."
If you're so broke that you're planning to hire a caravan for your summer holiday, avoid hiring one for more than five weeks. Otherwise, you'll pay 21 per cent VAT, instead of 13.5 per cent.
You'll save a few bob and keep your wife sweet if you give up your visits to the lapdancing club -- and head to the circus instead.
You pay 13.5 per cent VAT on admission to a lapdancing club "where a live performance is included as part of the admission fee". However, you won't pay any VAT on admission fees to a circus, castle or historic home.
If you can avoid concerts where drink is served, you'll also do well. "Tickets to a live music or theatre gig are exempt from VAT," says Mr O'Brien.
"But if you can consume food or drink during the performance, then the ticket is liable to 13.5 per cent VAT."
Sunday Indo Business