Government threatens to pull VAT reduction if prices are not reduced

The Government has today warned retailers who have not passed on the recent VAT reduction that it will be increased again if they do not do so immediately.

The reduction from 13.5% to 9% was intended to attract tourists and stimulate consumer spending, which in turn would support small businesses and jobs.

The minister with responsibility for promoting tourism, Michael Ring, said that he is furious with the anecdotal evidence that the reduction is not being passed on to consumers.

"I want to say to the people who are not passing it on: you might have short-term gain but it may have long-term effects on your business," he said.

"We are giving you the opportunity. We brought in a stimulus budget a few weeks ago - we also have an opportunity again very shortly if we find this is not being passed on, there will be a Budget again in December and this Government can bring the VAT rate up to 13.5% again."