A spokesman for An Post has warned that postage prices could rise by 21% following a proposal by the European Commission to apply VAT to national postal services, including stamps.
If VAT is applied at the top rate the move could see the cost of a standard stamp rise from 41 cent to 49 cent, according to An Post.
VAT applied at the lower rate of 13.5%, would see a standard stamp increase by between five and six cent.
European Commissioner for taxation Fritz Bolkestein said the move would improve competition, and should not significantly affect the costs of postal services for consumers. He said countries could apply to have a reduced rate of VAT on postal services of items weighing up to 2kg.
An Post's spokesman described the proposal as bad news for the semi-state group, which lost nearly €7m in 2001, and is reported to have made significantly greater losses last year.
Last March the Commission for Communications Regulation (Comreg) approved a three cent increase in the basic price of a stamp to 41 cent.
Commissioner Bolkestein said that the proposed changes would also allow postal operators to reclaim VAT incurred on their own costs, which was currently passed on to consumers as a 'hidden VAT charge'.
