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Tax increases to hammer RoI retailers

Retail Ireland, the trade body that represents retailers in the Republic of Ireland, has expressed disappointment that the Irish government chose to raise taxes in its emergency budget yesterday.

Irish finance minister Brian Lenihan unveiled measures in one of the toughest budgets in the country’s history, including an increase in income levy and capital gains tax as part of a plan to raise €3.5 billion (£3.15bn) to help the country get through the recession. 

“The biggest impact by for retailers is that the government will be taking more from shoppers who will have a lot less money in their pockets.”

Retail Ireland

The measures will not be welcomed by retailers in the Republic of Ireland, who are already struggling with a higher rate of VAT than Northern Ireland coupled with the competing with the weak sterling in the UK.

A spokesman for Retail Ireland, which represents retailers in the Republic of Ireland, said that it was disappointed that government had not focused more on raising money through spending cuts, rather than raising taxes.

“The biggest impact by for retailers is that the government will be taking more from shoppers who will have a lot less money in their pockets,” he said.

“Although we have to recognise that things have to change, when you combine the impact on consumers’ disposable income with the remaining uncertainty about job security, it’s not good news for retailers.”

Retailers had also been hoping for a reversal of last year’s VAT increase from 21% to 21.5%, however this did not happen.

However, Retail Ireland said there was some relief that the excise duties on alcohol had not been increased. The excise duties, proportionately much higher than in the UK, have been blamed for driving shoppers across the border to Northern Ireland, which was having a knock on effect on other product categories, as consumers did their shopping in the North.

The budget measures were part of a six point plan for economic recovery which aims to stabilise public finances, repair the banking system, improve competitiveness in exports, protect jobs, stimulate economic confidence and restore the country’s reputation abroad.

“We are now facing the challenge of this nation’s life. This is a time to set aside those narrow, sectional interests. Yes, we must be fair and I believe we have been fair. But now is the time for the common good to prevail.”

Brian Lenihan, finance minister

Under the budget measures, rises in income levy will be staggered depending on earnings. Capital Gains Tax has been increased from 22% to 25%. Jobseeker’s Allowance, rent supplements and mortgage interest relief will be cut.

Concluding the budget announcement, Lenihan said: “As the many interest groups prepare, as is their right and duty, to defend their sectional interests in this Budget, I ask them to pause for thought. We are now facing the challenge of this nation’s life. This is a time to set aside those narrow, sectional interests. Yes, we must be fair and I believe we have been fair. But now is the time for the common good to prevail.”

Read more on the Republic of Ireland’s budget announcement here.

Readers' comments (2)

  • This is very concerning to have tax rises when already no one has much money to spend in our stores in Ireland. I know something has to be done to save the economy but if retailers start going under then unemployment will rise and it will be a viscious circle. What are indies in Ireland doing to try to stimulate sales? Can we join together and share ideas?

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  • The Irish government talks about restoring consumer confidence, but how do these measure do that? They don’t. The tax increases will only mean that any recovery of confidence will take a lot longer, and how will retailers cope in that environment? Penalising ordinary people ultimately means penalising retailers and other businesses where they spend money. Where are the incentives and help for retailers? There is not even a glimmer of light at the end of the tunnel for them in this. If the government won’t help, retailers must find ways to get people buying or there will be more casualties… bigger drops confidence….less spending…. more casualties etc…

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