Retail Excellence has called for a VAT reduction of 3pc in next year’s budget to protect Ireland’s retailers from Brexit excesses.
The Budget 2018 submission from the largest representative body in Ireland calls for a general cut in the cost of doing business, increased funding to get retailers online and increased infrastructural investment.
‘Retail: Sustaining and Growing an Economy’ also outlines a need for garda resources, town renewal funding, introduction of measures to increase competitiveness, and improved access to finance.
“With external headwinds like Brexit and the limping on of negotiations between the UK and the EU, Ireland is already left exposed and this will impact on the sustainability of economic growth trends,” Retail Excellence spokesperson Lorraine Higgins said. Ms Higgins maintained that the group’s priority issue is a reduction in the 23pc rate of VAT which was introduced as a financial emergency measure.
“It needs to be cut by 3pc in one fell swoop as we believe incremental reductions would be a piecemeal response given previous experience has shown small reductions do not tend to have a positive impact on consumer spend,” she said. “High VAT rates impact on consumer confidence and sentiment which is exacerbated further by the negative VAT differential between us and the UK. This has contributed to the further development of online shopping trends which has led to €600,000 of spend every hour being fulfilled by businesses operating outside the country”.
Ms Higgins said that this leak of spend is unsustainable and will cause retail failure if adequate Brexit-proofed measures are not implemented in Budget 2018. “While the resilience and sustainability of Irish retail attracts less fanfare than the other two pillars of our economy (FDI and export focused businesses) it would be remiss to ignore the far-reaching tentacles of the industry and its sectors which contributes to micro-economies in every village, town and city in this country,” she said.
“Irish retailers operate 45,000 businesses with 282,000 employees directly employed in the industry (the largest private industry employer in Ireland) and an associated employment multiplier effect which increases that figure exponentially. As a direct consequence of retail activity, €5.7bn is contributed to the Exchequer (made up of €4bn in VAT and €1.7bn in PAYE ) on an annual basis. Therefore, the significance of retail must not be underestimated”.
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