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Retail Ireland reacts to UK VAT increase

Tuesday, 22 June 2010
Retail Ireland, the IBEC group that represents the Irish retail sector, today said that the UK VAT rate increase has major implications for the retail sector.

Retail Ireland director Torlach Denihan said: "The decision by the UK to increase its VAT rate from 15% to 20% is extremely significant. This is a further nail in the coffin of cross border shopping, which had already declined significantly due to substantial price cuts by retailers on this side of the border, the 20% reduction in the Irish rate of excise on spirits and the 6% increase in the value of sterling against the euro in the year to date.

"The UK VAT increase will reduce some of the distortions that contributed to cross border shopping, helping preserve the 267,000 jobs in retailing in Ireland. However, the retail sector needs to be able to deliver better value to the public through further price reductions. This can only happen if retailers can lower their operating costs. Rents and local authority rates in particular need to be reduced, and pay rates underpinned by the Retail Joint Labour Committee need to be reviewed. Landlords and local authorities who have not done so already should cut rents and rates," concluded Mr Denihan.

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