Calls to cut Vat and retailer rates

Retailers need reductions in Vat, transport taxes, and commercial rates to survive near stagnant consumer spending, say the sector’s representatives.

While the CSO’s latest retail index shows sales rising 0.4% in August, overall sales are 0.6% down year-on-year, the eighth consecutive year of annualised falls.

Sales are down 2% on average year-on-year in January to August.

Alan McQuaid of Merrion Stockbrokers said: “Personal spending on goods and services fell 2.4% in volume terms in 2011, the third annual decline in the past four years, and we’re not expecting much improvement in 2012.”

Mr McQuaid noted that the ending of the scrappage scheme for cars in Jun 2011 has made 2012 even more difficult for motor dealers than either 2011 or 2010. He compared a 25% fall in sales for Q2 2011 versus a rise of almost 13% prior to the June cut-off.

Chambers Ireland deputy chief executive Sean Murphy urged the Government to use Budget 2013 to ease pressure on retailers.

He said: “Retail sales are far short of what one would expect during August, with none of the usual boosts from tourism or back to school shopping. The summer months are among the best times of year for retail sales but with little pick up, the situation looks bleak unless the Government takes some of the pressure off the domestic economy.”

Isme chief executive Mark Fielding said the Government’s failure to create a retail strategy group is adding to the stagnation. He called for action on “commercial rates, unrealistic rents, uncompetitive labour costs, and tax-laden transport costs”. He also wants a reduction in the Vat rate.

“The current trend in sales, together with the high costs imposed on retailers is unsustainable, with the resultant closure of shops and subsequent job losses. The Government must realise the importance of retailers who have a strong commitment to sourcing Irish fresh food and act as the channel to market for Irish food produce,” Mr Fielding said.