TD calls for Ireland to match any UK VAT reduction to prevent cross-border shopping in run-up to Chr
A TD has called for Ireland to match any UK reduction in VAT rates in order to prevent market anomalies and a rush for cross-border shopping in the run-up to Christmas.
Liz Truss, widely expected to be confirmed next week as the next British Prime Minister and new leader of the Conservative party, had promised a 5pc reduction in VAT.
She has discussed the move with her advisers as the flagship element of moves to offset the effects of the cost of living crisis. But reducing the standard rate of VAT would have “serious implications for the Irish economy.”
Former Fianna Fail TD Marc MacSharry has called on the Government here to “act first on Value Added Tax,” given the challenges facing Irish business and consumers.
The idea should be part of Budget 2023 preparations, he argued. The Sligo Independent, whose father Ray is a former Minister for Finance, said: “We must be prepared to be radical when it comes to meeting the incredible burden facing families and small businesses in the year ahead.”
The “exponential” inflation increases to 40-year highs are such that “we must be more aggressive and imaginative in what we are prepared to do.”
Mr MacSharry said: “While Tory leadership election fever may well be a factor in the promises being made in the UK by frontrunner Liz Truss -- to reduce the British VAT rate by 5pc -- Our Government must consider reducing VAT here to assist business.”
If Ms Truss wins and the UK Treasury moves to reduce VAT by any amount, the the absence of a level of corresponding action here would have very serious implications, Mr MacSharry pointed out. This would particularly be the case for the retail sector in Ireland, especially those counties with proximity to the border.
“Like everyone else, the business community has suffered hugely throughout the period of the pandemic, which was immediately followed by exponential rises in inflation which in turn have led to punitive increases in the costs of energy, fuel, and other vital commodities essential to the survival of business,” Mr MacSharry said.
Without substantial and radical supporting measures, “we will lose many SMEs,” he warned.
“If the British move on this VAT reduction, as indicated, it may well spell disaster for many Irish jobs,” Mr MacSharry said.
“In any event, I believe our Government should consider a 2.5pc to 3pc reduction in VAT in the forthcoming Budget.“SMEs remain the backbone of all employment in Ireland, with 1,100,000 people – half the labour force -- working in businesses of between 1 and 250 employees. We must step up to protect these jobs, and VAT reduction can be a part of that.”