The recent inflationary pressures have led to the suggestion of an increase in Value Added Tax (VAT). This means that, from March 1 onwards, anything from accommodations and food services to family attractions will be more expensive by 4%. Let’s explore what this could mean for consumers.
What is Value Added Tax (VAT)?
Value Added Tax (VAT) is a form of taxation on goods and services. It is charged at every stage of the production process, from raw materials through to the final sale. It is then paid to the government at each stage. When consumers purchase something, they are paying for both the product itself and for the VAT that has been added to it.
The Impact on Consumers
It’s no secret that increasing VAT will result in higher costs for consumers. This means that anything from groceries to hotel stays could become more expensive if this proposed increase goes ahead. While it may only seem like a small difference, these additional costs can add up over time especially when they apply to everyday items such as food and drinks. For those who are on a strict budget, these extra costs can make life even more difficult and put further strain on their wallets.
The proposed 4% increase in Value Added Tax (VAT) will no doubt have an impact on Irish consumers if it comes into effect later this year. Prices across a range of products and services will be increased, with everyday items such as groceries becoming more expensive than ever before leading many people into financial difficulty. Not only that but businesses may struggle too if customers are not willing or able to pay inflated prices for their products and services. Ultimately, it remains unclear what the outcome of this potential change will be but one thing is clear: both consumers and businesses alike should prepare themselves for further financial burden if VAT increases come into effect in 2021.