Currys owner calls for VAT cut to combat North exodus

DSG Retail Ireland – the Irish division of the electrical retail group which operates the Currys and PC World chains – has called for a 3.5% reduction in the Republic’s VAT rate.

It is looking for new legislation to help reduce commercial rental rates, in a bid to keep down the numbers of people going north to shop and boost competitiveness in the retail sector south of the border.

A new report from the company shows that – of its customers going to the North for cheaper prices – almost 50% went from Donegal; with only 9% from Dublin, in comparison.

Only last month, DSG Ireland introduced a one-month price drop – in line with British prices – across its stores in the Republic. However, while the norm used to be for around 10% leakage across the border, the promotion didn’t do much to budge the 32% of consumers who are now regularly making trips to Newry and Belfast for bargains.

As a result, the company has now urged the Government to lower the VAT rate here from 21.5% to 18%; which would still be 3% higher than the British and Northern Ireland rate.

“The Government should stop playing politics with retail in Ireland and understand the negative effect this is having on consumer sentiment – increasingly consumers believe that the best value is to be had only in Northern Ireland and not in the Republic,” said DSG Ireland managing director, Declan Ronayne.

“Our report is just a snapshot of what’s happening – and being allowed to happen – to the retail business in Ireland,” he added.

Retail Ireland – the IBEC-affiliated retailer representative body – has been lobbying for a significant reduction in the VAT rate, but after the recent emergency budget conceded a lowering by 1.5%-2% would be more realistic at present.

There’s also concern that nothing will happen until next year’s budget is announced, later this year, or until the British VAT rate is upped, as has been mooted.

Mr Ronayne said: “If that’s the case, there will be a lot of retailers around the border counties who simply won’t still be in business come November or December. If we’re arrogant enough to think we can be competitive with this rate, then we’re in a bad place.

“If this is acceptable to Government, one has to ask ‘what’s going on?’”