Proposed VAT hike would be 'a killer blow' to the retail economy
Raising VAT will close businesses, increase cross-border shopping and cause job losses, writes Jerome Reilly
Michael Noonan's planned two per cent increase in the top rate of VAT, embarrassingly leaked from the German Bundestag, will place thousands of retailers on the brink of extinction, spark another flood of cross-border shopping and, inevitably, cause massive job losses, retailers and restaurant owners have warned.
And retailers say that the Government's 'suicidal' decision to drive the VAT rate up to 23 per cent will not generate the €670m in extra revenue the Government is hoping it will.
"Obviously the finance minister has never heard of price elasticity. When prices go up, people buy less. This VAT increase is a killing blow," said Dave Fitzsimons of Retail Excellence Ireland.