Retail Excellence call for VAT reduction
Irish retail organisation, Retail Excellence, has called for a 3 per cent VAT reduction to boost consumer spending in Ireland.
The group points to the economic uncertainty caused by Brexit and sterling devaluation as major factors for the government to consider in the 2018 Budget.
Retail Excellence’s deputy CEO, Lorraine Higgins, said the disparity between the UK and Ireland’s VAT rates is causing Irish retailers to lose out as consumers travel North to shop around for better deals.
Speaking earlier this summer, Ms Higgins said “Our priority is a reduction in the 23 per cent VAT rates which was introduced as a financial emergency measure some time ago. Such moves are critical for the wellbeing of Irish retail and the Exchequer. We are witnessing an increase in consumers travelling north of the border to shop with others buying over €14 million online from businesses operating outside of Ireland every single day.”
The Retail Excellence deputy chief cites the level of online spending as a drive behind the call for a 3 per cent VAT reduction in 2018, with upwards of €850,000 being spent online on foreign goods every hour.
“In relation to online spending this amounts to a loss of €1.2 billion in VAT receipts per annum for the Exchequer and this is only set to rise if corrective action is not taken,” she said. As reported by Retail Excellence, 22 per cent of Irish SMEs do not have an online presence, while three quarters of those who do are unable to process payments on their website, making it difficult for them to remain competitive.
The deputy CEO believes the difficulty caused by the current VAT rates are further exemplified by the fact that some products in the UK attract 0 per-cent VAT, whereas customers in Ireland are expected to pay 23 per cent on the same item. Although other retail organisations such as Retail Ireland welcomed the 2017 budget for increasing disposable income and supporting consumer spending, Ms Higgins states not enough is being done to combat the economic insecurity faced by retailers in the wake of Brexit.
“Retail is often overlooked in favour of the other pillars linked to the economy; FDI and export-focused businesses,” she added. “We have brilliant retail entrepreneurs in this country who are resilient to the core and deserve to be supported and assisted to become bigger and better at all that they do but they need support and Budget 2018 provides an opportunity to help them on their way.”
