The UK government's decision to cut the VAT rate from 17.5% to 15% could send even more Irish shoppers across the border into Newry. The move came today as Chancellor of the Exchequer Alistair Darling announced a £20 billion package to help stimulate the British economy. The new rate will come into effect next Monday.
Meanwhile, VAT in the Republic is set to rise by 0.5% to 21.5%. That's a 6.5% difference in VAT rates between the two regions. Then take into account the healthy Sterling exchange rate plus price differentials and you have a major incentive to go North. Recent months have seen major traffic jams in Newry as it's shopping centres fill with Southern registered cars. Those cars return across the border with cheaper alcohol, clothing and various other items.
It's true that bargains are to be had in Newry- for some reason goods appear to be significantly cheaper in the North despite the distance being so small. I recently clocked a price differential of €51 to £30 for a handbag (£30 is €36- so where is the rest gone?). Sure there's chatter about increased labour and VAT rates but that's still a huge difference.
Some of the media have been asking whether going North for shopping is unpatriotic.... that argument is truly madness in my opinion. How can we honestly be asking people to overpay in the South in the justification of keeping Irish jobs safe? Surely the government should be concentrating on addressing the situation rather than pointing the finger at frustrated consumers who are shopping with their pockets. We're in a downturn in case the government hasn't noticed.... so of course people are going to go where value is best. If that means over the border then so be it.
But the fact remains that shopping over the Border hurts the Irish economy. €300 spent in Sainsburys in Newry is stimulating the UK economy and generates VAT for the British Exchequer. Meanwhile Revenue has lost the VAT from your €300 shop that it would have gotten if you had shopped in Superquinn. Loss in VAT returns significantly hurts the Irish economy. The effect on society is less money to fund schools and hospitals. So where does that leave us? It leaves us with quite the dilemma- the choice between value in the North and personal monetary savings, or being ripped off in the South by greedy retailers but supporting the Irish economy. Oh dear.
Ultimately the government needs to take some responsibility for this issue, whether it is through cutting our VAT rate so that there's no reason to go North or finally tackling profiteering in Rip-Off Ireland.
Someone has to take responsibility for this, but consumers shouldn't be forced to choose between patriotism and value for money.
Meanwhile, VAT in the Republic is set to rise by 0.5% to 21.5%. That's a 6.5% difference in VAT rates between the two regions. Then take into account the healthy Sterling exchange rate plus price differentials and you have a major incentive to go North. Recent months have seen major traffic jams in Newry as it's shopping centres fill with Southern registered cars. Those cars return across the border with cheaper alcohol, clothing and various other items.
It's true that bargains are to be had in Newry- for some reason goods appear to be significantly cheaper in the North despite the distance being so small. I recently clocked a price differential of €51 to £30 for a handbag (£30 is €36- so where is the rest gone?). Sure there's chatter about increased labour and VAT rates but that's still a huge difference.
Some of the media have been asking whether going North for shopping is unpatriotic.... that argument is truly madness in my opinion. How can we honestly be asking people to overpay in the South in the justification of keeping Irish jobs safe? Surely the government should be concentrating on addressing the situation rather than pointing the finger at frustrated consumers who are shopping with their pockets. We're in a downturn in case the government hasn't noticed.... so of course people are going to go where value is best. If that means over the border then so be it.
But the fact remains that shopping over the Border hurts the Irish economy. €300 spent in Sainsburys in Newry is stimulating the UK economy and generates VAT for the British Exchequer. Meanwhile Revenue has lost the VAT from your €300 shop that it would have gotten if you had shopped in Superquinn. Loss in VAT returns significantly hurts the Irish economy. The effect on society is less money to fund schools and hospitals. So where does that leave us? It leaves us with quite the dilemma- the choice between value in the North and personal monetary savings, or being ripped off in the South by greedy retailers but supporting the Irish economy. Oh dear.
Ultimately the government needs to take some responsibility for this issue, whether it is through cutting our VAT rate so that there's no reason to go North or finally tackling profiteering in Rip-Off Ireland.
Someone has to take responsibility for this, but consumers shouldn't be forced to choose between patriotism and value for money.
(photo from Irishnews.com)
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