Can someone explain how increasing VAT to 23% will help in ANY way?

hatrickpatrick

Only bit of the plan which so far strikes me as mad and extremely dodgy.

Let's just imagine VAT goes up to 23%. Sure, the government will make some money from that, but SURELY this will be offset by the number of people who will now simply buy fewer goods as a result of them being more expensive - or worse, fuel a gigantic exodus of shoppers to the North?

The way I see it, they could lose far more money in putting off shoppers than they will ever make by increasing VAT... Aren't we trying to encourage people to start spending again, to try and get the economy moving and stem the loss of both jobs and businesses?

I'm not in any way suggesting a reduction in VAT but an increase at this moment in time seems completely insane, unless deflation is such that it won't really make much difference?

bamboozle

its an unbelievably shocking decision. Increased VAT rates here will achieve nothing but drive shoppers up north and result in the closure of indigenous industry & lots of shops in border areas.

Nice one Brian let further discourange people to spend money in Ireland.

Leiva

As soon as I heard that segment of the speech I had a face palm moment .

Absolute ridiculous decision

The M1 North bound is gonna be busy in the next few weeks .

Mr.Micro

People will just go more to NI or buy online. This country is so expensive as it is. Do not expect logic or rationale from this lot.

RedXIV

Its a shame too because with the UK rate going up, we could have been sneaky enough to drop below theirs and try and get some people from up north down here

Leiva

They decrease peoples spending then increase VAT ?

And you know whats even more surprising ???..... That Im surprised !

MagicSean

mixednuts wrote: »

As soon as I heard that segment of the speech I had a face palm moment .

Absolute ridiculous decision

The M1 North bound is gonna be busy in the next few weeks .

They'll probably slap a few more tolls on it.

Laois_Man

It will not send people flocking to Newry....because the UK have also increased their VAT by 2.5% (all in one go too) and by the time we get up to 23%, the difference between our VAT and theirs will be exactly the same as it has been for the last year. That's assuming the UK don't incrase VAT again in the meantime before we get up to 23%....which they probably will.

drunkmonkey

Feckin mad decision but i'm not sure it will happen, 1% in 2013 so it's a bit away yet.

godwin

RedXIV wrote: »

Its a shame too because with the UK rate going up, we could have been sneaky enough to drop below theirs and try and get some people from up north down here

Exactly! but that would be far to logical.

ardmacha

As soon as I heard that segment of the speech I had a face palm moment .

Absolute ridiculous decision

The M1 North bound is gonna be busy in the next few weeks .

So VAT is going to go up in 2013 and you (or your mates) are going to drive up the M1 in the next few weeks. That's forward planning for you.

2013 is a different world, the VAT increase will probably never take place.

Leiva

Laois_Man wrote: »

It will not send people flocking to Newry....because the UK have also increased their VAT by 2.5% (all in one go too) and by the time we get up to 23%, the difference between our VAT and theirs will be exactly the same as it has been for the last year. That's assuming the UK don't incrase VAT again in the meantime before we get up to 23%....which they probably will.

Exactly ..Which makes it still cheaper up north , and this is a big opportunity lost to get those people who are saving to get out and spend .

It would have been a glimmer of light in this Dark Plan to cut VAT and to invoke some confidence in people to spend and get the Economy moving .
But no they cut peoples disposable income whilst also increasing purchase prices ...thats a double wammy in my books not to spend .

wylo

I personally dont think it will affect prices too much, I believe in the next few years alot of shops will be dropping their prices anyway.

Leiva

ardmacha wrote: »

So VAT is going to go up in 2013 and you (or your mates) are going to drive up the M1 in the next few weeks. That's forward planning for you.

2013 is a different world, the VAT increase will probably never take place.

When and where did i say I will be going North ?

WalterMitty

Another timebomb FF are leaving for next government. Labour/FG will be forced to back track on this and other things like croke park agreement. Sleeveens that they are they want to lay lots of traps of incoming administration so they will be able to say to public servants, pensioners etc "We didnt cut ya, we tried to protect ya"

westtip

We need the money for Public Sector pay and to pay off redundancies...It is a crazy decision

---

more black economy, more unregulated work, cash is king

this statement is being made by muppets. the launch reminded me of those tiger days when they used to launch things like the NDP, Transport 21 and the National Spatial strategy.

Laois_Man

mixednuts wrote: »

Exactly ..Which makes it still cheaper up north , and this is a big opportunity lost to get those people who are saving to get out and spend .

It would have been a glimmer of light in this Dark Plan to cut VAT and to invoke some confidence in people to spend and get the Economy moving .
But no they cut peoples disposable income whilst also increasing purchase prices ...thats a double wammy in my books not to spend .

But you're ignoring that will be the VAT difference if UK do NOT increase again by the time we get to 23%....which you can be sure they will. Remember, our VAT stays at 21.5% for the next 2 years...only 0.5% above UK. Much less than before!

Also, creating a gradual and still very cautious increase in consumer spending is not gong to generate/save 6 Billion in 2011 which is the blood that IMF/EU want for their money!

OMD

mixednuts wrote: »

Exactly ..Which makes it still cheaper up north , and this is a big opportunity lost to get those people who are saving to get out and spend .

It would have been a glimmer of light in this Dark Plan to cut VAT and to invoke some confidence in people to spend and get the Economy moving .
But no they cut peoples disposable income whilst also increasing purchase prices ...thats a double wammy in my books not to spend .

Things have changed a lot up north. A product (liable for VAT) that cost £100 this time last year will cost £104.35 by Jan 2011 from VAT changes in UK (before you add in inflation).

In euros this was the equivalent of €111 last year compared to €123 now.(due to currency changes)

Add to this inflation in UK is higher than here and you can see how little a 1.5% rise in Irish VAT rates matters to cross border shopping.

ardmacha

This thread is a waste of space. They said they would increase VAT in the future to reach the targets. At this stage we don't know how things will be in Jan 2011 never mind Jan 2013, so ranting about it and talking about people driving up the M1 is a complete waste of time.

jimmycrackcorm

VAT increases is an attack on Kerry people - servers them right for having JHR as their TD - it's payback time...

drunkmonkey

wylo wrote: »

I personally dont think it will affect prices too much, I believe in the next few years alot of shops will be dropping their prices anyway.

What will happen is more shops close decreasing competition, Distributors will also go bust.
Your going to end up with less competition and higher prices. There is not one thing positive about this move, it's going to cost jobs.

TherapyBoy

drunkmonkey wrote: »

What will happen is more shops close decreasing competition, Distributors will also go bust.
Your going to end up with less competition and higher prices. There is not one thing positive about this move, it's going to cost jobs.

+1 ^

I can't understand why they don't drop VAT rates, even if by 1 or 2 percent in times like this. We need to be encouraging people to buy not pushing them elsewhere. As far as businesses dropping prices, I personally can't drop prices anymore. I'll have to pass on the VAT increase to my customers or close, things are that tight for small business.

rainbowdash

RedXIV wrote: »

Its a shame too because with the UK rate going up, we could have been sneaky enough to drop below theirs and try and get some people from up north down here

We are also reducing minimum wages and I think the UK's is going up. We could bring the min. wage below theirs, reduce airport taxes, bring VAT below theirs and market our island as a cheap and close destination for them to visit, and hence create a thriving tourism sector along with jobs for many and fill a lot o the NAMA hotels, but that would be called an intelligent strategy and we can't be having that.

Padraig Mor

Not a huge increase and not the end of the world, although it would be better going in the other direction. Of FAR more potential consequence is this:

Zero rated VAT items to be reviewed as part of EU level consideration.

Most 'essentials' are zero-rated......

OMD

drunkmonkey wrote: »

What will happen is more shops close decreasing competition, Distributors will also go bust.
Your going to end up with less competition and higher prices. There is not one thing positive about this move, it's going to cost jobs.

Increasing the rate from 21% to 23% means prices will increase 1.65% over the next 4 years (or 1.2% higher than it was last year when VAT was 21.5%) or basically 0.4% a year on average. I cannot see this causing shops to close.

hatrickpatrick

OMD wrote: »

Increasing the rate from 21% to 23% means prices will increase 1.65% over the next 4 years (or 1.2% higher than it was last year when VAT was 21.5%) or basically 0.4% a year on average. I cannot see this causing shops to close.

If you couple it with whatever percentage disposable incomes will be going down by, you might see the connection.

It's absolutely mad to increase prices while decreasing the amount of money in circulation, and NOT expect it to further damage the economy. Deflation means that both incomes AND prices should go down.

Tigger

Laois_Man wrote: »

But you're ignoring that will be the VAT difference if UK do NOT increase again by the time we get to 23%....which you can be sure they will. Remember, our VAT stays at 21.5% for the next 2 years...only 0.5% above UK. Much less than before!

Also, creating a gradual and still very cautious increase in consumer spending is not gong to generate/save 6 Billion in 2011 which is the blood that IMF/EU want for their money!

21% at the moment

rumour

ardmacha wrote: »

This thread is a waste of space. They said they would increase VAT in the future to reach the targets. At this stage we don't know how things will be in Jan 2011 never mind Jan 2013, so ranting about it and talking about people driving up the M1 is a complete waste of time.

Quite right. However I'm disappointed. Our chance for reform gone. The usual wishy washy promises of public sector reform and what transpires nothing other than a reduction caused by a recruitment embargo and natural retirement.

This will come back to haunt us. There is no structural reform here only increased taxes and some promises.

The Garret Fitzgerald school of economics, if we thought the 80's were bad wait and see what 2014 turns out to be like.

holayadios

I know it sounds mad, but it will reduce the debt drastically, In Spain our government rose 2 points the VAT in July and the deficit has gone down massively. It will reduce the consumer expenditure, but in the current desperate situation the question is internal demand o deficit reduction I´m afraid....

whatawaster

We should have lowered VAT imo.

Zeouterlimits

jimmycrackcorm wrote: »

VAT increases is an attack on Kerry people - servers them right for having JHR as their TD - it's payback time...

What?