Opportunity for Ireland??

apope8 · 22-06-2010 2:16pm #1

Hey Guys,

Dunno if this is the right place to be posting this, so feel free to move if it is not.
An idea popped into my head while noticing that UK are going to be upping their VAT to 20%.

If Ireland dropped to lets say 17% (unrealistic I know) could this possibly pull in a lot of customers from the north. The same way customers flocked up there from the republic. I could imagine this having a boom affect on the boarder towns and bringing loads of jobs to the areas while also giving the government a boost by actually doing something favorable for the "ordinary person" and giving them the confidence to go out and buy more, which in turn would create jobs in the retail sector. While also creating tourism opportunities from the UK with people coming to Ireland for "Shopping Holidays".

What do you's think? Am I being terribly naive and simplistic? Or could this be an opportunity for us?

Be good to hear a discussion on this.

Eliot Rosewater · 22-06-2010 2:29pm

I think the goal is right - increasing Ireland's competitiveness - but I don't think a relatively minor change in the VAT rate will be effective enough to turn the tide in this regard.

The bigger issue is the cost of doing business here, especially the cost of employees. As we saw with Dell, Ireland needs manufacturing jobs and can't rely on the semi-mystical "knowledge economy" to supply all its needs. The enormous wage increases given during the boom need to be scrutinised in the light of our new recessive economic reality.

The minimum wage, in particular, has a sizable impact upon the cost of basic retail products like food and drink, I imagine.

Permabear · 22-06-2010 2:34pm

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apope8 · 22-06-2010 2:35pm

well i suppose if they were to reduce the minimum wage, a drop in the vat rate would make this less painful. As people would still have the money they need to afford a decent cost of living.

djpbarry · 22-06-2010 2:39pm

Eliot Rosewater wrote: »

As we saw with Dell, Ireland needs manufacturing jobs and can't rely on the semi-mystical "knowledge economy" to supply all its needs.

True, but we can't rely on the same sort of manufacturing jobs that kick-stated the celtic tiger either. We simply can't compete with cheaper locations for assembling electronic devices, for example. There is, however, certainly a place for high-end manufacturing (semi-conductors, pharma, medical devices, etc.) - it could be viewed as something of a compromise between the much-vaunted knowledge economy and the now-becoming-defunct bread-and-butter manufacturing industry.

EDIT: Sorry, I just realised I was heading off-topic there.

Permabear · 22-06-2010 2:40pm

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dan_d · 22-06-2010 2:42pm

apope8 wrote: »

well i suppose if they were to reduce the minimum wage, a drop in the vat rate would make this less painful. As people would still have the money they need to afford a decent cost of living.

And there it is in a nutshell, what people frequently fail to notice. The cost of living is tied to people's wages. As people's wages go down, so will the cost of living. A reduction in VAT would obviously help this greatly.
I'm not sure if it would necessarily solve all our problems, but it would help somewhat.

Tea drinker · 22-06-2010 2:53pm

It's a good idea,
but if the state reduces it's cut, what's the stop the vendor increasing his to swallow the extra revenue available? Are we really sure there is adequate competition to get that tide coming in and fill the coffers with what we would lose?

apope8 · 22-06-2010 2:55pm

Tea drinker wrote: »

It's a good idea,
but if the state reduces it's cut, what's the stop the vendor increasing his to swallow the extra revenue available? Are we really sure there is adequate competition to get that tide coming in and fill the coffers with what we would lose?

I suppose Lenihan would have to give another "threat" the same way that he did with the alcohol that if he doesnt see reduction in price the tax would go back up

Permabear · 22-06-2010 2:58pm

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Permabear · 22-06-2010 3:10pm

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Cookie_Monster · 22-06-2010 3:15pm

the other issue stemming from that is you can't lower minimum wage without lowering social welfare payments as people will just gravitate towards welfare.

Ireland needs to cut its cost base in some many ways, wages being only one part of that. Rent, rates, power, licensing fees all need to come down before we see decent price drops.

Cutting VAT won't bring people from the North as prices here will still be more expensive

22-06-2010 3:19pm

donegalfella wrote: »

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You love going on about that :rolleyes:
Go on, tell us the story about how you were so wise during the boom, we all really want to hear it again

Liam Byrne · 22-06-2010 6:50pm

Cookie_Monster wrote: »

Ireland needs to cut its cost base in some many ways, wages being only one part of that. Rent, rates, power, licensing fees all need to come down before we see decent price drops.

Not to mention car tax, petrol and transport costs, the illegal VRT, public transport costs, phone, mobile and broadband, TV licence, bin and recycling charges, Sky and Tesco charging significantly more than in the UK, new so-called "Green" taxes, insurance and mortgages, road tolls, flat rate levies on bank cards, etc.

Essentially, while the cost of living has apparently decreased, most of the above are relatively static, or have gone up.

So what you are spending at least 65% of your disposable income on has not changed.

Therefore minor decreases in VAT or even in the cost of food etc, while welcome, are miniscule by comparison.

Rip-off Ireland is still alive and well in many, many sectors, and the biggest offender is our own Government.....taxes might have been lowered over the last decade, but stealth taxes and fees to privatised/licensed operators are sickeningly high in relative terms.

Cookie_Monster · 22-06-2010 8:42pm

Liam Byrne wrote: »

the illegal VRT,

:rolleyes:

there is nothing illegal in anyway about VRT so stop talking ****e

It should remain and even raised on the lower bands.

Opportunity for Ireland??

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