VAT plan could see Irish stamps costing 58c

The price of a stamp could rocket to 58c if the European Commission succeeds in imposing 21pc VAT on postal services, Fine Gael MEP Gay Mitchell warned.

He said the controversial proposals could fuel inflation and cause serious damage to An Post’s business at a time when it was struggling.

The Government referred the Commission’s plans to the Oireachtas European Affairs Committee, which is chaired by Mr Mitchell.

Previous proposals by the Commission to impose 21pc VAT on postal items weighing more than 2kg were dropped earlier this year.

The new proposals are for all items weighing more than 10kg to be taxed at the standard or reduced rate of VAT.

However, Deputy Mitchell said he believed that VAT would eventually be applied to items below 10kg once the Commission succeeded in establishing the principle.

“The price of a stamp could rocket to at least 58c, and there would be a significant impact on the cost of sending parcels,” he said.

The Commission’s proposals are designed to address distortions in the EU’s postal market.

It said last year that the introduction of VAT was designed to end unfair competition.