Consumers start to feel the pain as VAT rise takes its toll
CONSUMERS are being hit with a whole range of unexpected price increases as the 2pc VAT hike takes its toll.
Phone, TV and broadband bills are all rising as most companies pass on the increase in the top rate of VAT from 21 to 23pc.
Motorists filling up since the new year have already been hit with steep increases in the price of petrol and diesel as a result of the Budget rise.
Some filling stations were charging as much as €1.579 for petrol yesterday.
The Automobile Association said it had already received complaints from motorists angered by the latest increases.
Prices at the pumps had generally risen by around 2.4c to 2.5c since midnight on New Year's Eve, said director of policy Conor Faughnan.
"We have been monitoring prices, and the increases do appear on average to be in line with the VAT rate, so it's the Government rather than stations that are ripping us off," he said.
"However, the average price is around €1.50 and you can get petrol for €1.48, so if you see it selling at €1.55, you should certainly drive away and get it elsewhere for less," he said.
Government tax hikes had added 20c a litre to the price of fuel in the last three years, showing it didn't make any difference which party was in power, he added.
Stations charging over the odds for petrol yesterday included Esso Violet Hill, Dublin 9 (€1.559); Topaz Fonthill Road, Clondalkin, Dublin 12 (€1.549); Esso Main Street, Castletownroche, Co Cork (€1.579); and Topaz Clare Road, Ennis, Co Clare (€1.549).
Most telecoms firms are also passing on the VAT hike, the Irish Independent has learned.
Eircom said yesterday it had "decided to pass on the increase to our customers for the majority of our products and services".
There were a few exceptions such as some promotional offers on certain bundled packages, but most of their landline, mobile and broadband rates will rise on all bills issued from January 1.
UPC said it was passing on the increases to its TV, phone and broadband customers.
"Customers will be billed at the VAT rate applicable at the date of billing," it said.
But Sky said it was not passing on the VAT increase to any of its Irish television customers, existing or new, as it had a price freeze in place until 2013.
Mobile company O2 said that pre-pay rates for non-contract customers would remain unchanged as it had decided to absorb the increase on these. However, bill-pay customers would see the VAT rate increased to 23pc on invoices issued from January 1.
Vodafone said that it was absorbing the new VAT rate across the vast majority of its plans, including prepaid ones.
Supermarkets have been criticised for trumpeting the fact that they would not be passing on VAT increases on food -- which isn't much of a sacrifice for them as most foodstuffs are exempt anyway.
Also yesterday, the Government insisted it was sticking to its promises not to raise income tax rates or cut basic social welfare rates, despite pressure from the EU-IMF to cut the deficit.
Following reports yesterday of a warning that welfare cuts and income tax hikes were unavoidable, a spokesman for the Department of Finance said the promise remained.
"The commitment is still the same. And at this stage, we are not going to get into the Budget for 2013," a spokesman said.