Vat relief but retail still in peril

Industry representative groups have welcomed the retention of the 9% Vat rate, but have largely slammed Budget 2014 as not going far enough in helping the struggling retail sector.

Retail Excellence Ireland — the largest umbrella body for Irish retailers — went so far as to brand the bulk of yesterday’s relevant measures as being “anti-retail”.

“It is clear that the reduction of the Vat rate from 13.5% to 9% in last year’s budget has had a very positive impact on job retention and creation.

“According to the Department of Finance the measure retained and created 13,500 jobs.

“We are pleased that Minister Noonan has accepted our argument and retained the rate,” said REI chief, David Fitzsimons.

However, he said the increase in the tobacco licensing fee — from €50 to €500 per year — misses a chance to tackle black market illicit tobacco sales and, instead, penalises legitimate and regulated vendors.

“The ten-fold increase in the fee will damage smaller convenience store retailers who have already suffered an exponential decrease in sales,” he said.

REI also expressed disappointment in the increase in the pharmacy dispensing fee and the extension of the period that an employer must fund sick pay for an employee — from three to six days.

“This, quite simply, is a further barrier to employment and could — in effect — drive absenteeism rates,” Mr Fitzsimons added.

Stephen Lynam of the Ibec-affiliated Retail Ireland said: “Retailers welcome the freeze in fuel duties and the freeze in Vat rates.

“The black market costs the State hundreds of millions of euro every year and measures designed to tackle the problem are also welcome.

“Retail Ireland has long been campaigning on the issue. However, the excise increase will negatively impact on responsible consumers and reduce spending in many retail outlets.”

“Retail sales have fallen by 25% since the end of the boom and 50,000 retail jobs have been lost.

“If the Government wants a sustained economic recovery it needs to do more to help consumers and support Ireland’s biggest industry — retail,” he warned.