Times Past

This edition of Times Past takes us back in time to more penal tax times.

VAT Rates

Many consumers grumble about Ireland’s standard VAT rate of 21% (which is at the higher end of the scale in EU terms) but those readers who are children of the sixties and earlier will remember darker times, much darker times. In 1976, we saw the introduction of a 35% rate for motor cars and a whopping 40% being applied to radios, televisions, record players and records (for the benefit of our younger readers records were back vinyl discs, with a diameter of either seven or twelve inches and a hole in the middle, which produced music when you revolved them around a needle).

In 1979 the 35% and 40% rates were abolished with the rate on cars, televisions etc reduced to 20% (Hurrah!). Don’t get too excited, new excise duties were introduced on these items to make up the shortfall, a favourite trick of governments throughout the years; just look at VRT.

The early eighties were a time of joy. As if a 16.25% mortgage rate and a top income tax rate of 60% were not enough, the VAT rate on luxury items went back up to 35% (we haven’t checked, but we bet that the compensatory excise increases introduced in 1979 weren’t taken off again).

In category of “not a lot of people know this”, did you know that food and children’s clothing and footwear were subject to VAT at the rate of 5.26% when VAT was introduced in Ireland in November 1972? Food was reduced to its current zero% rating in September 1973 with clothing following in 1975. Adult clothing remained zero rated until 1984. You may recall that an attempt by John Bruton to introduce VAT on all clothing and footwear (including children’s) in 1982, led to a fall of the government. While there is talk from time to time of the imposition of VAT on food and children’s clothing it will take a brave finance minister to put his head above the parapet in future.

Finally, in the early seventies, the young people of Ireland were so into dancing the night away to showbands such as the Miami, Brendan Bowyer, the Indians, the Capitol etc, that they had their very own VAT rate. The 11.11% rate applied to the admission to dances only. We would guess that there weren’t too many calculators around in 1972 so one can just imagine the promoter trying to calculate the VAT liability at the end of a busy night. Could they not have just left it at 10%?