Budget Vat cut would be an 'extremely significant' cost to the taxpayer, department officials warned

"Being more 'targeted' not permitted under EU laws"

"Officials warned that a cut in Vat for cafes, restaurants and fast-food chains would come at an "extremely significant" cost to the taxpayer and would create a lot of "dead weight" by supporting businesses that did not need help."

"In a pre-budget submission, Department of Finance civil servants said the measure would apply to all businesses."

EU laws prevent targeted reductions in VAT for selected sectors. Officials warned that cutting VAT for cafes, restaurants and fast-food chains would impose an extremely significant cost on taxpayers and produce substantial dead-weight by subsidising businesses that do not require assistance. The proposed measure would not be sector-specific because, in a pre-budget submission, Department of Finance civil servants stated that any VAT reduction mechanism would apply to all businesses. Legal restrictions under EU rules and fiscal impact considerations constrain the state’s ability to deliver selective tax relief to hospitality or fast-food operators without extending benefits broadly across the economy.

Read at Independent