VAT increase 'will drive consumers across border'

Retail Ireland, the IBEC group that represents the Irish retail sector, today condemned the decision by the Minister for Finance to increase the VAT rate by 0.5% to 21.5% in the Budget.

Torlach Denihan, Director of Retail Ireland said: "The decision by the Minister for Finance to increase the VAT rate by 0.5% to 21.5% in the Budget is likely to prove counterproductive.

"The increase in VAT makes Ireland less competitive by comparison with our nearest neighbour, Britain, where the VAT rate is 17.5% and will compound the problem of people crossing the border to shop.

"It is not the time to increase VAT when consumer confidence is at an all-time low and retail sales have fallen sharply for the first time since the late 1980s. The Minister’s decision to increase VAT is likely to lead to a further fall in retail sales."