Newry set to benefit from Irish VAT rise

Declan McAteer Posted by
Tuesday, December 6th, 2011
Business, News

The influx of shoppers coming to Newry from the south is set to increase after the Republic of Ireland government announced a 2% increase in VAT. The news is a welcome boost for Newry, which has seen the number of southern shoppers decline in the recent years. According to the British Retail Consortium, shoppers heading to Northern Ireland had dropped 5% since 2009.

With the coalition government in the Republic announcing a 2% rise in the top rate of VAT from 21% to 23%, the decline is likely to stop now with incentives such as cheaper fuel and alcohol set to be huge factors. Retail Ireland Director Torlach Denihan said, “A 2% increase may not in itself be enough to drive people north to shop, but if they increase excise duty on alcohol as well and there is any negative change on exchange rates, it would be really dangerous.”

However, shoppers from the South will also be wary of the increase in carbon tax when planning their journey north. According to Retail Ireland, the numbers buying fuel in border towns such as Dundalk are set to decrease by 30% as people make their way to Northern Ireland, causing a “devastating effect” in border counties.

Chairman for Retail Ireland, Frank Gleeson said, “In light of the deteriorating economic situation in Britain, George Osborne announced last Tuesday that he was cancelling the planned 3p fuel duty increase due in January, while the UK’s 5p rise planned for August 2012 has been reduced to a 3p per litre increase.”

Newry will be affected by southern budget.

He continued, “In the Republic, we are facing a 5.5c per litre increase when higher carbon taxes and a 2% VAT rise come into effect. This will leave motor fuel costs south of the border higher than those in the north. This could lead to a 30% fall in trade in towns south of the border, resulting in a loss of revenue to the State in excess of €110 million. This will have a devastating effect in border counties, which are already battling with high unemployment. A fall in trade could mean further job losses, lost income-related taxes and increased social welfare costs.”

Gleeson added, “Thousands of jobs have already been lost in the retail sector and this will only make things more difficult for businesses already struggling to survive. The run up to the busy Christmas trading period is the worst possible time of year to make these announcements.”

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