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Irish tax on goods among world's highest

Wednesday, February 27 12:21:33

Most shoppers instinctively know it but now it's official: The Irish pay some of the highest sales and consumption taxes on our shopping baskets in the world.

A new international report reveals that the Irish consumers pay more tax on day to day consumer items compared to other countries and pay the world's highest tax on our petrol.

The report published today in Ireland shows that we have the sixth highest level of consumption and sales taxes in the world including goods such as groceries; wine; petrol; home energy products and professional services, with the Irish Government taking 15.8pc of the total price of a basket of goods and services.

That's according to Alan Farrell, Head of Irish accountancy firm Farrelly Dawe White a division of UHY, the international global accounting and consultancy network who revealed details in special report published by the company in Ireland this week.

Alan Farrelly, partner of UHY Farrelly Dawe White Limited in Ireland, a member firm of UHY, who commissioned the report said that Ireland's high taxes for consumer products do not compare well with other economies.

After India and Brazil, the Irish consumer is landed with some of the highest tax burden which threatens to undermine our recovery in consumer spending due the pressures imposed on disposable incomes.

Carried out by UHY tax professionals studies were carried out on data from 22 countries across its international network, including all members of the G8 and the developing BRIC economies. It calculated the percentage of the total price of a representative basket of goods and services that was made up of taxes and duties.

"With above average consumption and sales taxes, Ireland will continue to see the consumer side of the economy weighed down. This won't help the economic recovery. Reducing sales taxes could be a gamble worth taking to help jump start the economy."

Farrelly says that European economies have 'zig-zagged' over the past few years, limping into growth and slumping back into decline. "Struggling with huge budget deficits, European governments, he said, have raised income and sales taxes. This has severely discouraged the consumer spending that could support a stronger recovery."

Ireland is not alone in increasing sales taxes. The report shows that the UK, the Netherlands, and France have all increased their sales taxes recently - the UK raised VAT from 15pc to 20pc with two changes in the space of just two years. France plans further rises in 2013.

UHY adds that taxes on 'necessity' purchases in Europe are exceptionally high. There are six countries in the study where over 50pc of the price of a litre of petrol is made up of taxes: Ireland (60.5pc); France (59.1pc); Germany (58.5pc); Italy (57.8pc); the UK (58pc); and the Netherlands (50.2pc).

Although some basic items in Ireland are free from sales taxes, such as bread or children's clothing, the benefits for consumers are wiped out by the high levels of taxes on more expensive purchases like fuel or household energy bills the report show.

Six of the ten countries with the highest taxes on household energy bills were European countries, with an average of 19pc of energy bills in these countries being made up of tax.