VAT hike will not rake in expected cash, say analysts

DOUBT was cast on the Government’s ability to rake in cash from the hike in the VAT rate, given the downturn in the global economy.

Small business groups hit out, saying the hike from 21% to 23% is “short-sighted” and will not bring in the revenues forecast. ISME said the increase would have a “devastating impact” on businesses already struggling to survive.

Bloxham chief economist Alan McQuaid said that VAT intake was now €464 million, or 4.6%, below target so far in 2011 and, based on these figures, he said one had to question the wisdom of increasing the top rate of VAT.