The planned increase in carbon tax in Budget 2012 will result in drivers heading North to buy petrol, retailers are warning this week. Frank Gleeson, chairman of Retail Ireland, predicted “a devastating effect in border counties”.
Retail Ireland said yesterday that the numbers shopping for fuel in border towns could fall by 30%, with the State standing to lose out €110 million in tax revenue.
The organisation, which represents 3,000 Irish retailers, said that by increasing carbon tax and VAT, Government risked giving consumers an incentive to return to shopping in the North for a wider range of products, including alcohol.
Retail Ireland chairman Frank Gleeson said: “In light of the deteriorating economic situation in Britain, George Osborne announced last Tuesday that he was cancelling the planned 3p fuel duty increase due in January, while the UK’s 5p rise planned for August 2012 has been reduced to a 3p per litre increase.
“In the Republic, we are facing a 5.5c per litre increase when higher carbon taxes and a 2% VAT rise come into effect. This will leave motor fuel costs south of the border higher than those in the north. This could lead to a 30% fall in trade in towns south of the border, resulting in a loss of revenue to the State in excess of €110 million.
“This will have a devastating effect in border counties, which are already battling with high unemployment. A fall in trade could mean further job losses, lost income-related taxes and increased social welfare costs.
“Thousands of jobs have already been lost in the retail sector and this will only make things more difficult for businesses already struggling to survive. The run up to the busy Christmas trading period is the worst possible time of year to make these announcements.”