VAT changes ‘will allow Republic to compete again’

CHAMBERS Ireland said yesterday that the reduction of the VAT rate to 21% combined with the restoration of the British rate of VAT to 17.5% would give southern retailers a real opportunity to compete with traders north of the border.

Ian Talbot, Chambers Ireland chief executive, said: “In the past 12 months many Irish retailers have seen their sales figures crash as result of the VAT and excise differentials, currency movements and higher costs of doing business in the Republic of Ireland.

“The reduced VAT rates coupled with the changed excise rates on the sale of alcohol will stimulate spending and generate much needed revenue streams for the Exchequer, while also helping to stem the flow of job losses, particularly in the retail sector.”

On the issue of the cost of doing business in Ireland Mr Talbot said: “The Government has acknowledged that local authorities are a key driver of cost for business.

“The Efficiency Review of Local Authorities announced in Budget 2010, together with the proposed introduction of site valuation taxes and domestic water charges provide the Government with a genuine opportunity to devise a fair and sustainable funding system for local authorities, and in turn help to reduce the cost burden on business.”

“In 2010 all stakeholders in the Republic must remain focussed on cost reduction with a view to enhancing Ireland’s competitiveness and assuring a speedy return to growth based on export success,” he said.

In additional comments. the Chambers deputy chief executive, stressed the role the VAT changes north and south would play in “helping to boost battered consumer confidence”.

By the end of 2008 Irish citizens had been piling up their savings with over €81.5bn on deposit in the Irish banks as the credit crunch spooked people into saving substantially more than was normal for the rainy day.

That increase in savings continued for much of last year as consumers remained sceptical about the economic outlook at home and abroad, he said.

Retail figures in September suggested confidence may slowly be returning after the property bubble and the global credit crunch that wreaked havoc in most economies, he said.

“We campaigned hard for the VAT change and we are very glad that the Minister for Finance, Brian Lenihan, in his December budget took action and reduced VAT.”

The decision by Fingal County Council to cut rates by 10% this year “will further boost the cause of Irish business while other councils across the country are considering their position also”, he said.