UK VAT rate to be cut to 15%

More pain for southern retailers as the north’s VAT rate is set to be reduced to 15% for a year. Just in time for our own half percentage point increase to 21.5%.

I’m not sure this is going to do much to help the UK economy as a whole but it will certainly have a big impact up north. 6.5% is a big difference (our VAT rate will be 43% higher) and when you add in exchange rates, lower excise duty and general lower cost of doing business in the north I can see this as being a particularly grim Christmas for any southern retailer within 50 miles of the border.

It won’t make much difference as the salient issue is the fall in Sterling. Nordies and Brits who are up to their eyeballs in debt are not going to splash out over 2.5% less VAT, assuming that the retailer passes this on. In reality UK retailers are so desperate to get cash through the tills they are doing sales even this early before Christmas, eg Debenhams doing 25% off or even 50% off clothing.

2 Scoops,

It’ll make a dreadful situation worse. i have already postulated here and elsewhere that the .5% increase in VAT will ensure a commercially steralised triangle from the midlands to the Donegal on the west and to Drogheda on the east. The lesser of the 2 Brians (if there is a small enough measurement to measure their brain cell) if this is true should resign as Minister for Finance. He was waffling today on News @ 1 that his budget was still intact.

I was thinking last year of buying some machinery say a tractor/sprayer/mower. I took €2k out of the bank as a holding deposit. I didn’t buy and everyday that comes justifies that decision. Garage in Donegal wanted €10k for 20 year old case. I reckon I’ll a mid 90s version for €12k next year.
This if it comes in and at this stage it’s speculation will close every farm machinery garage in the State, goodbye buying petrol South of the Border as well, good buy DIY stores andonandon

It won’t help car sales here.
Buy a six month old low VRT car from a UK car supermarket and you don’t have to pay VAT here.
for every 11,750 sterling car that’s a saving of 250 sterling on new list price.

I would have thought that, perversely, reducing vat is a deflationary measure, and to be avioded.

Who cares if it can be explained away as a once-off effect.
And if it keeps companies going out of business so much the better.

I suspect that there has been an influence accross the island of Ireland, not only in the 50 mile distance triangle as mentioned above, especially in regard to how Sterling has been devaluing in recent weeks, this VAT change will only progress the influence.
Lots of Christmas shopping by people throughout Ireland to be done in the North, including people from Kerry and Cork that I’ve been speaking to in recent weeks.
I’ll be going there in a few weeks time myself.

Retailers are entering a new phase of commercial life. One in which they appreciate customers coming in the door , one in which a smile is given when the customer hands over money and a thank you to finalise the transaction.

I for one will be heading North yet again to spend many €’s :slight_smile: And why ? Cheaper prices ? Yes. Better service ? Yes. A smile when I pay ? Yes. What would keep me from travelling ? Cheaper prices , better service and of course that elusive smile :wink:

Southern retailers have alot to do. It’s not about profit any more. It’s about liquidity , pure and simple. Survive the liquidity test and your lazy , inept competitors will fall by the wayside and thereby leaving you to lap up the larger market.

i’m with you Bottler. I’m in Dundalk and do all my shopping in Newry.

Typical example today from doing my shopping.
Sainsburys, Newry: 150g blueberries - 2 for £4 (about €4.75)
Dunnes Stores, Dundalk: 150g blueberries €4 EACH

Newry: Brylcreem hairgel: £1.57 (about €1.85)
Dundalk: Brylcreem hairgel: over €4

Same goes for 99% of items across the board in the store.

Our local paper “The Argus” - giant piece of crap of a paper that seems to love catering to mortgage providers, EA’s and other VI’s - has had sob stories from local retailers practically every week whinging about people heading north. While i have some sympathy for some of them, the vast majority deserve all they get. We are being completly screwed in the south on prices. I couldn’t give a rats ass about being loyal and “buying irish”. tell that to the many families struggling to pay the bills and put food on the table. We needa massive cleanout of the inefficiencies, poor customer service and general sense of entitlement in this country.

I’ll finish with this:
pint of Harp in my local in Dundalk (where the Harp lager brewery is located no less) - €4.20
pint of Harp across the border in Warrenpoint last night: £2.40 (approx €2.85)

Madness. XX

I moved to London and was shocked at how the cost of living decreased for me in terms of food, rent is more expensive that’s about it. Complete joke that a small provincial city (Cork) should be more expensive that one of the biggest cities in the world.

the brits give out that our corporation tax is too low, that it distorts the market, interestingly they won’t apply the same logic to their new VAT regime.

I think I mentioned reducing VAT many months ago as a better response to Irish problems. Interesting times.

regarding the response to a recession,
we increase, they decrease,
who is right and who is wrong? sounds like a stupid question to me :smiley:

See no this is also very interesting because of the many times I’ve heard Irish politician when asked about high VAT saying “oh but the EU won’t let us change the VAT…” there is a thread covering this very topic of annoyance.

Luxembourg are on 15% already which is as low as E.U. allows.

We’re quite happy to cut Corporation tax to attract foreign industry and let it run away with our money. Why can’t we cut VAT to retain expenditure in this economy? It might be ‘pursuit to the bottom’ economics - but hey we started it and we even prided ourselves on it. At least cutting VAT would be of benefit of some people in the economy.

Why did we increase taxes on the poor with the crazy 1% income levy - thing is the poor spend all the money you give them, usually in this economy - the rich piss it all away on Bulgarian apartments.

Wonder how this will affect my rebate. Currently I pay 13.5% of VAT back to UK Revenue and keep the other 4%, which as a small business is very welcome.

hope this comes in before the christmas big shopping journey to the NORTH

amazing how every week passes it seems to get a lot worse for the south
i remember i moved over from the UK in 1986 i was a teen then and we had to unload all the contents of the removal truck
customs & excise inspected everything that was new
they came out to my mother and father at the time with a bill to pay VAT on the irish price of the items items
it looks like those days might come back the way things are going!

I hope it hurts and that its very painful for business because its the only in extremes that this government seem to learn or to take action. Anther thing the public listened to their lies and voted them in and as has been mentioned in previous threads you reap what you sow.
I am oft surprised at the level of stupidity shown by joe public in respect of what this government and its politicians have been up to and by the lack of financial education in this country but Im not surprised at where we have ended up as a result.

Will we ever learn? End of rant.

I’ve been saying for months and months that the correct response in a downturn would be to cut indirect regressive taxes, charges and fees in order to keep punters spending and reduce the tax & administrative burden on SMEs. What do The Brians propose to do? The exact opposite :unamused:

Of course, given the standard Irish boneheaded approach to matters financial, if the Goobermunt in Dublin actually did cut VAT, the response of Irish retailers would instinctively be to raise prices even further XX