Tax change to 'decimate' Wild Atlantic Way tours

The Burren: Tax changes may destroy small retailers along the Wild Atlantic Way, according to an economist.

Proposed tax changes, currently moving through the Oireachtas, will “decimate” Irish tourism along the Wild Atlantic Way route, a leading economist has warned.

The Retail Export Scheme allows non-EU tourists to claim Vat refunds on Irish craft and gift items purchased in Ireland. However, the Government’s Brexit Omnibus bill aims to exclude all purchases under €175 from the scheme.

Economist Jim Power said the Government should “urgently rethink” its proposals. He said the existing scheme supports small retailers in tourist areas and encourages craftspeople and designers, many of whom are in key locations along the Wild Atlantic Way.

Passing of the bill would mean that tourists would have to spend at least €175 on a single purchase to avail of a Vat refund. Nearly 85% of refunds, under the current scheme, are purchases of less than €175 and the scheme contributes over €108m to the economy.

“The tourism and retail sectors have been decimated by Covid-19 and they face a very challenging future,” said Mr Power. “They need as much support as possible over the coming years. Increasing the Retail Export Scheme threshold to €175 would not represent support, and it would totally fly in the face of the ongoing efforts to promote Irish tourism,” he said.

The bill also introduces heavy restrictions on the use of the scheme for visitors from the UK.

But, according to Mr Power, the Government’s fears of too much Vat being refunded to UK visitors are ‘’unfounded’’.

“The ‘risk’ to the exchequer in terms of Vat, based on the spend profile of UK visitors, is not more than €7m, yet the risk to spending from North America, the Middle-East, and other non-EU countries such as China and Japan, is significant should the threshold limit rise as proposed,” Mr Power said.

He also said that the real price of purchases by tourists would rise by up to 23%. This would be very significant, he said.