VAT ON BELOW COST DRINK

In a week when the Government ratcheted up a notch or three its campaign against the major supermarkets’ policy of selling below-cost alcohol, a backbench TD has turned the spotlight on how taxpayers are effectively subsidising cheap booze.

Labour Party TD Kevin Humphries says the Vat rebate claimable on below-cost sales “adds insult to injury” to taxpayers who have to deal with the social cost of cheap alcohol.

The Sunday Business Post reports figures from the Drinks Industry Group of Ireland (DIGI) show the supermarkets claim such Vat credits to offset their below-cost marketing promotions, which are aimed at bringing customers through their doors.

“The large retailers can claw back revenue amounting to €350 from every 1,000 units of wine sold below cost, DIGI figures show,” the newspaper report says.

DIGI says the ability of the multiples to do this threatens the survival of small independent retailers.

Around 95% of alcohol carry-outs are purchased in the big five multiples – Tesco, Dunnes Stores, Centra, Spar and Costcutter.

The Taoiseach Enda Kenny said last week cheap alcohol was blighting and ending young lives. Róisín Shortall, the Minister of State with responsibility for drugs strategy, also wants the practice of below-cost selling of alcohol abolished.

When questioned by Humphries on the Vat issue, finance minister Michael Noonan said it would be difficult to separate alcohol from other below-cost promotions when it came to Vat reclaim eligibility.

“Traders’ Vat returns show only the total input Vat and the total output Vat for the period covered by the return”, he said in the Dail.

Vat recovery occurs at various stages along the supply chain, from manufacturer to retailer.

“Consequently, if there is a decrease in value at any stage in the process, the trader is entitled to a refund of the excess of Vat incurred over that collected,” Noonan said.