Richard Bruton (Dublin North Central, Fine Gael)
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Question 305: To ask the Minister for Finance the reason he has introduced the 21% VAT rate on drinks made from fruit and vegetable products, as these are made from fresh and wholesome ingredients and will be subject to a higher rate of VAT than most fast foods. [9905/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The Finance Bill 2007 amendment referred to by the Deputy ensured that the supply of fruit juices and vegetable juices continues to be taxable at the standard VAT rate of 21%. Indeed, all fruit juices, soft drinks and bottled water have been subject to the standard rated since 1992.

This amendment was necessary following a recent ruling by the Appeal Commissioner that a certain fruit/vegetable juice product qualified for zero-rating. The outcome of the appeal has led to uncertainty in relation to the VAT treatment of other drinkable products made from fruit and vegetables. In this regard, it should be noted that fruit and vegetables are also the main ingredients of most soft drinks which are also subject to the standard VAT rate.

Not ensuring that the supply of fruit and vegetable juices continued to be taxable at the standard VAT rate would have resulted in a possible distortion of competition between producers of what could be considered similar products. It should also be borne in mind that the scope of the zero rate on food and drink is challenged regularly by producers and suppliers, which meant it was necessary to re-establish a level playing field in this market to ensure that a more favourable tax treatment does not apply to one product.