Retail in free fall - Talk of taxes is reckless

The latest retail figures make frightening reading, as retail sales dropped by more than 20% in January over the same month last year. This was the largest decline since records began in 1974.

The Irish economy is heading for the worst performance in over 40 years. Jobless claims are already at a record high and could jump by a further 30% this year as the economy contracts by as much as 6.5%.

Ministers should get out of their cars and walk down the streets of our towns and witness the number of businesses that have closed. There is a lot of reckless talk about taxing “old reliables”.

Many public houses have closed in the past year as a result of the double blow of the smoking ban and stricter drink-driving laws. As a result, more people have begun drinking at home.

Last week, Finance Minister Brian Lenihan admitted that the Government made a “serious mistake” in the October budget by increasing the VAT rate from 21% to 21.5%. “It was a mistake and the wrong thing to do,” he said. “We have lost €700m in revenue going to the North.”

Raising the excise duty on drink could prompt more people to buy their drink in the North. This will lead to further pub closures, as well as the undesirable social implications of more drinking at home.

Lowering tax rates proved the key to getting out of the last recession, especially with the dramatic lowering of the corporate tax. The Government must show realistic imagination in facing our retail problems.