Companies such as Waterford Crystal stand to lose huge amounts of business due to a provision in the Government's Brexit omnibus bill, the Dáil has been warned.
Under the bill, the Retail Export Scheme, which allows non-EU tourists to claim Vat refunds on gift items purchased here, will rise to €75. Cabinet last week agreed that figure as a compromise to the proposed higher amount. It had been proposed that all tourist gift purchases costing under €175 be excluded from the scheme due to the fear it may be abused after Brexit.
However, TDs warned the Government during a lengthy debate on the bill that even this amount was too high, as campaigners have pointed out.
Waterford TD Matt Shanahan said it would severely impact sales of crystal to American tourists.
He said: "In my county, bus tours and cruise visitors avail of this Vat rebate when purchasing Waterford Crystal, woollens, craft, and traditional gifts and mementos. This tax change is going to affect a significant number of retail businesses and geographic areas. For Waterford Crystal it will remove nearly 60% of all US customer sales."
Roscommon TD Denis Naughten said the plan "will literally use a sledgehammer to crack a nut".
"We are increasing our threshold by €75. The same exclusion will apply in France, where they are decreasing their threshold by €75," he said.
"The same rules will apply in Spain where they are reducing the threshold by €80.
"It seems we are going in the opposite direction to our EU colleagues."
Sinn Féin's John Brady said that the measure should be dropped "in the spirit of wearing the green jersey", and that it would have a negative effect overall on retail.
Minister of State Sean Fleming said that measure was needed to avoid "double non-taxation".
"We have heard of double taxation, but there is a real possibility of double non-taxation in this situation...one can have people travelling from the UK claiming the Vat back under the Irish scheme and going back to the UK where they are resident and, without having to prove that they paid Vat, getting a Vat refund. They can actually get a refund in both countries without this measure in place."
Tourism and retail groups have called the plan "botched" and said that it currently contributes over €100m to the Irish economy.