Retail Ireland Calls For VAT, Excise Cuts

by Jason Gorringe, Tax-News.com, London

06 April 2009

Retail Ireland, the Irish Business and Employers Confederation (IBEC) group that represents the Irish retail sector, has called on the Minister for Finance to reduce excise and VAT in the April 7 emergency budget.

Director of Retail Ireland Torlach Denihan said: "The Minister for Finance must make the bulk of the 2009 adjustment to the public finances on the expenditure side of the equation. While revenue raising measures are necessary, it is essential that too much money is not taken out of the economy in taxation or consumer spending will collapse.”

"Retail sales fell by the largest annual drop ever recorded last year and the trend has continued into 2009. We predict that 25,000 more retail staff will go on the live register this year. The Irish Minister for Finance, Brian Lenihan, should address the situation by reducing excise on alcohol and by cutting the Value-Added Tax (VAT) rate in next month's supplementary budget.”

"Retail Ireland believes that the conclusion that cross-border shopping will cost the Exchequer in the range EUR72-EUR112m contained in the recently published Revenue Commissioners/Central Statistics Office report significantly understates the problem. Since this report was published a week ago we have reviewed it in detail and concluded that the loss of VAT and excise due to the cross-border purchase of alcohol alone will be of the order of EUR100m in 2009. Many millions of euro more will be lost in VAT and excise on all products other than alcohol purchased on shopping trips to the UK. The total will be substantially in excess of the upper figure projected by the Revenue Commissioners/Central Statistics Office report.”

"It is crucial that minister does not use the Revenue Commissioners/Central Statistics Office report as a basis for decision making on excise and VAT rates. The report's authors themselves acknowledge that their conclusions are based on extremely limited available quantifiable data.”

"The differential between excise rates on alcohol here and the UK is unsustainable and needs to be reduced to combat cross border shopping. Our VAT rate should be cut to 20% to boost consumer confidence and to improve our long-term competitive position by comparison with the UK," argues Retail Ireland.

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