Reducing VAT in Ireland?

spadder

The UK vat rate cut is getting positive reviews from economists over there. The Irish government has said it’s not an option here, why not? Then they are moaning that shoppers are going north to avail of cheaper groceries, cars etc. reducing vat rates will increase sales resulting in overall higher vat returns, this is what the brits are banking on.

The governement reminds me of diagio, trying to get people to go to pubs by increasing prices.

ejmaztec

spadder wrote: »

The UK vat rate cut is getting positive reviews from economists over there. The Irish government has said it’s not an option here, why not? Then they are moaning that shoppers are going north to avail of cheaper groceries, cars etc. reducing vat rates will increase sales resulting in overall higher vat returns, this is what the brits are banking on.

The governement reminds me of diagio, trying to get people to go to pubs by increasing prices.

Because they're carrying on the great Irish political tradition of forcing mass-emigration so that the migrants can send vast sums of money back to Ireland to pay for the running of the country.

They just cannot afford to play with the big boys and never could.

Nodin

spadder wrote: »

The UK vat rate cut is getting positive reviews from economists over there. The Irish government has said it’s not an option here, why not?

Probably don't have the cash to take the short term hit.

Permabear

This post has been deleted.

spadder

but if people are going north in their thousands to spend, the state is losing everyway. I think Lenihan should look at this urgently, at least drop vat 'till xmas to get people to spend in the ROI

ninty9er

You're assuming UK retailers are going to pass on the cut to get consumers spending. Retailers here are already cutting prices and it doesn't seem to be doing much apart from the lady on TV3 lastnight.

genericgoon

Firstly, the Government can't afford to be taking the risk that reducing VAT will boost spending down here and secondly, even if our VAT was the same it wouldn't surprise me if the North was still significantly cheaper as it seems irish retailers are only now coming to terms with the fact they won't be able to charge extortionate prices and tbh the damage to their reputation is already done. Perception is now on the side of the North's retail sector and no short term measure will be any significant dent in the outflow of cash to the North.

lostexpectation

is it something to do with having more imports here?

they were saying the uk and irish economy are different.

anyway c lenihan said on Q&A it was no go.

spadder

lostexpectation wrote: »

is it something to do with having more imports here?

they were saying the uk and irish economy are different.

anyway c lenihan said on Q&A it was no go.

so it's off to Newry we go.

spadder

They just done a vox pop on newstalk ( moncreif) I would say 90% of the people said they are heading north.
I think this is very dangerous to our economy Cowen has to address this urgently. It will cost us dearly.

mrgaa1

i wonder if someone knows the answer given the info above: if the Irish government dropped VAT to 15% to match the UK would the price of most items be the same, more or less ?
Of course any VAT drop in Ireland would mean that shoppers would have to work out overall is their day trip costing them more. But the question is more related to items like clothes, electronic goods etc..... I suppose the adage should be better to have the monies in the pocket than to be thinking it should be there!!!

oscarBravo

mrgaa1 wrote: »

i wonder if someone knows the answer given the info above: if the Irish government dropped VAT to 15% to match the UK would the price of most items be the same, more or less ?

More. Earlier this year I priced a bicycle in Halfords UK at £100. The same bicycle in Halfords Ireland was €225. I drove to Omagh and bought two.

Fratton Fred

most goods in Ireland seem to be based on an exchange rate of about €1.50 to £1.00 I guess to take into account the VAT difference etc, but the exchange rate is somewhere around €1.18 to £1.00 at the moment, so even with a VAT drop of 6.5% it still makes sense to head north.

meglome

I seem to remember that when the government lowered the VAT rate to 20% prices didn't go down and when they raised it to 21% again prices went up. I know supposedly you charge whatever you can get for a product but in Ireland we really seem to have taken that to heart and the Irish people have taken it lying down. And as OP said drink prices have been going up and sales going down. Traditional economic logic would say if sales are going down you would be more competitive on price but in Ireland we seem to manage to do the opposite. This year I've been more picky about what I pay for goods/services than I ever have as we're being utterly screwed, if we all do this we might see some change.

lostexpectation

its too high anyway though isn't compared to the rest of europe

ednwireland

nope, stuffs overpriced here anyway, theres an irish retail mindset outside the big stores anyway that you never reduce prices ever for anything you only put them up and thats here the price disparity has come from. now some shops are going to have stock bought at 1.50 to the pound they really are going to have to drop prices 30 - 40% to compete. i bought a camera on the internet €120 couldnt even find anything locally (even in argos at that price). all my big ticket items are bought in the north. i try to shop down here but its getting very difficult to justify spending the amounts here (last years booze for christmas was bought in derry must have been half the price of down here). as other posters have said the gov. have to do something but what? Business wont wake up until its too late cant see the gov. doing anything after building an economy on building 80000 houses a year (who in their right mind thought that would continue) guess we are all screwed

spadder

Alan Dukes calling for a vat reduction on the radio.

xOxSinéadxOx

and who is alan duke?

dresden8

In response to a downturn my local pub put up his prices and reduced his opening hours.

In a normal country they would drop prices or do something crazy like that.

In Britland they have offers like a pint and a burger for a fiver, irish businessmen don't have the imagination to come up with something like that, the only option they look at is gouging the customer.

This is all going to end very badly unless these greedy f*ckers wake up and see their customer base is seriously teed off.

spadder

xOxSinéadxOx wrote: »

and who is alan duke?

Former leader of FG, quite a sharp man imho

http://en.wikipedia.org/wiki/Alan_Dukes

meglome

dresden8 wrote: »

In response to a downturn my local pub put up his prices and reduced his opening hours.

In a normal country they would drop prices or do something crazy like that.

In Britland they have offers like a pint and a burger for a fiver, irish businessmen don't have the imagination to come up with something like that, the only option they look at is gouging the customer.

This is all going to end very badly unless these greedy f*ckers wake up and see their customer base is seriously teed off.

That never ceases to amaze me. The Thomas Read group just went into examinership and I don't rate their chances as they are charging some of the heftist prices in town.

TheGermanMan

Most EU countries reducing VAT/ give other reductions to the inhabitants.
E.g. Shops reducing the prices to sell more! Especially during christmas.
Here they raise prices and rip-off the people - but even worser, nearly
noone is doing something against it - most people still trust in the Government Heroes.
Instead of keeping the money in the country they offer most of the Irish
(at least the East Cost :mad:) the opportunity to get their shopping done to a much lower price than in the IREP - Fantastic Maneuver

It's time to stand up my Irish fellows before another large-scale emigration will come up - maybe it already started.

So to all people close to NIRL I wish you all a nice shopping around
pre-Christmas period and to all the other fellows, not living so close,
a hopeful pre-Christmas period - hopefully the goverment get bso much pressure from the people also to reduce the VAT.


So long


The German Man

turgon

The way I see it is reducing vat will stimulate the economy by encouraging spending. Otherwise people will go online and make even bigger savings than they normally do.

Colonel Sanders

ninty9er wrote: »

You're assuming UK retailers are going to pass on the cut to get consumers spending. Retailers here are already cutting prices and it doesn't seem to be doing much apart from the lady on TV3 lastnight.

I was in Belfast last weekend and plenty of retailers had already applied the VAT decrease (ahead of its actual implimentation date today) and were advertising the fact.

spadder

Just wait till the exchequer figures come out for this period, we will have Cowen & co saying this is very serious and we will have to form a committee to look at the vat rate.

Cowen, you don’t need a committee, you need to look at the traffic going north, the VAT rate needs addressing right now! We are loosing millions every day in vat.

genericgoon

spadder wrote: »

Just wait till the exchequer figures come out for this period, we will have Cowen & co saying this is very serious and we will have to form a committee to look at the vat rate.

Cowen, you don’t need a committee, you need to look at the traffic going north, the VAT rate needs addressing right now! We are loosing millions every day in vat.

The question is will even a significant VAT cut put a dent in that trend or has the damage already been done to the Irish retail sector?

Personally, a VAT cut is completely useless at the moment and the Government would be better served saving that move for when things start to pickup again (probably not til 2010). The public has a notoriously short memory in general and if VAT were reduced when things are just starting to pickup, it would give a further jumpstart to the economy, rather than hopelessly trying to stop the significant reduction in our retail sector. Of course, the Government will also use this to buy votes but if people are incapable of retaining their anger about their handling of our economy for the last decade for more than the duration of the worst times, then more fool them.

--amadeus--

the retail cost base is apparently significantly higher here. That goes for everything from rents (hello property boom again!), rates, wages and the amount that is set aside to cover pilfering. And currency fluctuations with teh £ in free fall need to be considered. The recent small rise in our VAT coupled with the larger cut in the UK is only one factor, and a fairly small one at that.

Cutting VAT to 15% down here will reduce the difference in prices but won't eliminate teh price difference so you'll still have shoppers heading North (or to NYC). So you will have the double whammy of lower tax rates on lower volumes (rather than higher tax rates on lower volumes, as at present).

TBH I'm not convinced that simply getting consumers spending again down here is the answer anyway. As long as our cost base remains high across all sectors we are going to continue to shed jobs and I don't see how it is responsible to be encouraging people to spend at the moment when the short term future is so uncertain for most.

Banks need recapitalisation - hard cash - and consumers face financial difficulties. It might be time to bite the bullet with another SSIA type scheme to encourage people to save in the short term to protect themselves in case of a job loss rather than saddle themselves with more debt. And the influx of deposits helps stabilise the banks.

spadder

genericgoon wrote: »

The question is will even a significant VAT cut put a dent in that trend or has the damage already been done to the Irish retail sector?
.

It's a start, as the saying goes, "if you look after the pennies...."
like running a business, everything has to be watched

sovtek

spadder wrote: »

The governement reminds me of diagio, trying to get people to go to pubs by increasing prices.

i think that's the various vintners assocation you are referring to. A cartel if there ever was one. Proven beyond doubt this week when they said that they would freeze prices.
The Competition Authority needs to raid just about every industrial sector in Ireland and patch up the deficit with some serious business crushing fines.
That's the reason everything is so expensive here.
And dropping the VAT will do **** all. They will not pass it on to us.

genericgoon

spadder wrote: »

It's a start, as the saying goes, "if you look after the pennies...."
like running a business, everything has to be watched

The problem is that the Government is already on very thin ice in terms of its debt levels and is going to find it hard to justify a definite drop in VAT revenue in the hope that this will have some kind of appreciable effect on the exodus up North. A VAT drop, imo, will have little or no effect and thus the reduction is rendered pointless. Plus, the Government has already U-turned enough, they are going to have to stand by some of their fiscal measures or we'll be here next year, looking at the far more serious cuts that will be needed by that stage if nothing is done now.

old boy

joe public payes the goverments wages, joe public bailed out the banks, insurance, and builders, and developers, so why the feck should he have to subsidise the rip off merchants,

kleefarr

old boy wrote: »

joe public payes the goverments wages, joe public bailed out the banks, insurance, and builders, and developers, so why the feck should he have to subsidise the rip off merchants,

Hear hear.

ninty9er

old boy wrote: »

joe public payes the goverments wages, joe public bailed out the banks, insurance, and builders, and developers, so why the feck should he have to subsidise the rip off merchants,

How much money exactly have you PERSOANLLY, as Joe Public, given each bank so?? Because I know I've given feck all. I pay some civil servants wages, but what I pay in tax per year wouldn't cover a month for a cleaner.

Shops ARE ripping us off, why? Because we let them. I no longer buy anything that can be bought in £Stg online from the same store as the exchange rate was ridiculous even when £Stg was strong.

A VAT rate drop isn't going to change that. The government can't throw €3bn down the toilet to drop VAT to 16% if there is no justifiable evidence that

A) people will spend an extra €19billion in 2009 as a result just to balance the €3bn, never mind bringing in more.

that the shops will pass the cut on.

A and B are linked.

kleefarr wrote: »

Hear hear.

:rolleyes:

kleefarr

ninty9er wrote: »

How much money exactly have you PERSOANLLY, as Joe Public, given each bank so??

<snip>

:rolleyes:

Well I envy you as you obviously have free banking as well as interest free loans and overdrafts. And if you don't use a bank and have no loans or overdrafts I envy you even more.

ninty9er

kleefarr wrote: »

Well I envy you as you obviously have free banking as well as interest free loans and overdrafts. And if you don't use a bank and have no loans or overdrafts I envy you even more.

Yes I have free banking, but will continue to do so as there are easy ways to avoid paying bank fees, which they even advertise! Where can I get an interest free loan, because if I could get one of them I'd take it and tell the credit union where to shove their car loan!

I did have an overdraft, but due to a gripe with the particular bank (not my usual bank), I borrowed the money elsewhere, repaid it and closed the account.

If my parents got to their mid-40s before needing a credit card, I don't see why I should need one really.

spadder

Hate to be a told-you-so Brian:


http://www.breakingnews.ie/ireland/eyaucwidmhgb/

What is it with these gobsh1tes?
Anyone who has been shopping in the north in the last year could have told you this.

ejmaztec

spadder wrote: »

Hate to be a told-you-so Brian:


http://www.breakingnews.ie/ireland/eyaucwidmhgb/

What is it with these gobsh1tes?
Anyone who has been shopping in the north in the last year could have told you this.

I see that the Indo mentions, in relation to this, that 49% of the drink consumed down here was sourced in The North. The "FF floundering about" continues.

I think that the €700m is probably the tip of the iceberg when the big picture is looked at. I for one haven't bought anything up there, but I have bought stuff on the web from England and Scotland. I wonder what the statistics for web purchases are, presuming they're available?

thebman

We need to reduce vat and increase direct taxation on income tax.

Vat is fine in boom times because people don't shop around or cut expenditure and the more you buy, the more you pay.

When things go downhill however, you can't depend on this type of tax.

the explorer

in the mini budget he should increase both rates of income tax by 2% and increase petrol and diesel by 2c a litre each. dont bother hiking tax on cigarettes because people will just smuggle more in.

turgon

They made a mistake, and they admit that, but heaven forbid they will say sorry, or worse still, admit that their fall in popularity is justified.

ejmaztec

turgon wrote: »

They made a mistake, and they admit that, but heaven forbid they will say sorry, or worse still, admit that their fall in popularity is justified.

I'm still trying to figure out who they are listening to for advice. They do have something in common with the Northern dissidents, in that they don't give a hoot about public opinion.

Soldie

They should at least half the current rate of VAT if they want to stimulate the economy.

Permabear

This post has been deleted.

Dr Galen

wouldn't that be an awful gamble though as there would be no guarantee that public spending would increase accordingly, what with consumer sentiment being in the doldrums right now.

Soldie

donegalfella wrote: »

This post has been deleted.

Yet the EU seems baffled as to any anti-EU sentiment. What business is it of theirs what our rate of VAT is?

Mystik Monkey wrote:

wouldn't that be an awful gamble though as there would be no guarantee that public spending would increase accordingly, what with consumer sentiment being in the doldrums right now.

People might find it more affordable to drown their sorrows if our 21.5% VAT wasn't contributing to certain Dublin pubs charging €5.80 for a pint of lager, at least.

oscarBravo

Soldie wrote: »

Yet the EU seems baffled as to any anti-EU sentiment. What business is it of theirs what our rate of VAT is?

Are you seriously telling me that anti-EU sentiment is based on the Union's competence over indirect taxation?

In all the Lisbon debates, I don't remember that one coming up.

Soldie

oscarBravo wrote: »

Are you seriously telling me that anti-EU sentiment is based on the Union's competence over indirect taxation?

In all the Lisbon debates, I don't remember that one coming up.

No, I'm not - people are too busy worrying about the USE army and the legalisation of abortion.

In all seriousness though; I think concerns over the EU's policy of enforcing abritrary VAT limitations are perfectly legitimate - not to mention the ECB's interest-rate policies.

Permabear

This post has been deleted.

thebman

Mystik Monkey wrote: »

wouldn't that be an awful gamble though as there would be no guarantee that public spending would increase accordingly, what with consumer sentiment being in the doldrums right now.

No we are losing so much to NI purchases at the moment, it would not make it worth it for a lot of people doing long distance journeys.

When everything drops in price by that much, people would notice and couldn't help but buy that great value item now instead of waiting as VAT rates will go back up when we recover from the recession.

I think it should be dropped as much as possible and I'd abolish the minimum wage and reduce social welfare considerably. Social Welfare will define minimum wage anyway as your not going to work if you'll earn more by not working.

This would reduce the price of everything by a massive margin as retailers could afford to pay people at the counter less and it would reduce the cost of doing business here considerably and then we might actually become competitive against the UK and attract people to shop down here.

givyjoe81

thebman wrote: »

No we are losing so much to NI purchases at the moment, it would not make it worth it for a lot of people doing long distance journeys.

When everything drops in price by that much, people would notice and couldn't help but buy that great value item now instead of waiting as VAT rates will go back up when we recover from the recession.

I think it should be dropped as much as possible and I'd abolish the minimum wage and reduce social welfare considerably. Social Welfare will define minimum wage anyway as your not going to work if you'll earn more by not working.

This would reduce the price of everything by a massive margin as retailers could afford to pay people at the counter less and it would reduce the cost of doing business here considerably and then we might actually become competitive against the UK and attract people to shop down here.

Not just disagreeing with you for the sake of it! But decreasing the minimum wage would be disasterous for the people working on the min wage, I know of one former employer who has always only ever paid the min wage, even in the good times and wouldnt hesitate to lowering to whatever he thinks he can get away with it, my point being that unscrupulous employers will exploit their staff who simply cant afford to work for less or much less anyway than the min wage. Working for less would only be possible if prices across the board seriously dropped. Students such as myself dont have the option of choosing between social welfare or min wage jobs. Min wage is around 8.65 per hour, thats still very very low, even if it looks high in comparison to other countries. Everything else is so expensive still!!

thebman

givyjoe81 wrote: »

Not just disagreeing with you for the sake of it! But decreasing the minimum wage would be disasterous for the people working on the min wage, I know of one former employer who has always only ever paid the min wage, even in the good times and wouldnt hesitate to lowering to whatever he thinks he can get away with it, my point being that unscrupulous employers will exploit their staff who simply cant afford to work for less or much less anyway than the min wage. Working for less would only be possible if prices across the board seriously dropped. Students such as myself dont have the option of choosing between social welfare or min wage jobs. Min wage is around 8.65 per hour, thats still very very low, even if it looks high in comparison to other countries. Everything else is so expensive still!!

The minimum wage is not low in this country by any stretch.

Everything else is so expensive because minimum wage is at a ridiculously high level. Costs for shops like Tesco etc... are ridiculous in this country precisely because of high minimum wage. They have to pay this to everyone and the companies they buy services have to do the same and then add their profit margin on top of this so it spirals costs upward.

Most people in this country are earning probably not much above minimum wage and the cost of goods and essentials in an economy is all based around what the average person can afford. This determines the worth of goods. If you reduce minimum wage and wages are reduced, prices will come down.