the Euro cross-border blunder revelation in the German Bundestag that Ireland is facing a 2% hike in the highest VAT rate to 23% will hit southern Irish border businesses in Donegal the hardest, it has been suggested this week.
Donegal businesses say that they are struggling to meet ends meet as it is and this could be the final blow to many, who have worked tirelessly to make shopping in Donegal more competitive and value for money since 2008.
CEO of Letterkenny Chamber of Commerce Toni Forrester told the Democrat/DPP that the strange irony is that most of the damage which will occur relates to the ‘psychological’ belief amongst customers that heading north is a panacea to VAT increases in the south.
“There is a natural instinct to head north everytime somebody mentions VAT hike in the south, but the reality is that while a 23% VAT rate is still that, the real difference in terms of revenue loss is caused by people thinking they will automatically get a great deal once they go north of the border.”
Meanwhile Bernie Mulhern, Chairperson of the Donegal Town Community Chamber said that Donegal organisations from sporting clubs to charities were looking to local businesses to support their fundraisers, not the likes of ASDA.
“This VAT increase will be a big blow to businesses in Donegal town and other shopping towns in this county. We are trying hard to retain what we have and this happens. It will be pulling people over the border again, so a measure to increase consumer confidence or increase the VAT take, is simply nonsense when it comes to this county. I recall the late Brian Lenihan saying that his decision to up VAT in 2008 was regrettable in hindsight. I firmly believe this current government will come to the same conclusion.”
Mountcharles based Independent Cllr John Campbell called on the government to reconsider what he described as a foolish move to increase vat in the upcoming budget. ‘Businesses across the country are struggling to stay afloat, struggling to maintain jobs, and this is the government’s solution?’ questioned Cllr Campbell.
“I believe it is further proof, if proof were needed that we are the forgotten county,” he remarked. He stated that business people in the Donegal town area have voiced their alarm to him at the proposed vat increase and the proposals on sick pay.
Donegal North East Fianna Fáil TD Charlie McConalogue has said that the decision to frontload a 2% increase in VAT will put serious pressure on businesses in border towns and villages.
“Local businesses on this side of the border have been aggressively pursuing price cuts and competitive business strategies for the past number of years leading to better value for money for shoppers. Prices are well down on what they had been. This 2% VAT hike is an insult to their efforts to remain competitive. Worse still, it could be the final nail in the coffin for many local businesses. “The 3% differential between us and Northern Ireland will naturally lead to a migration of shoppers faced with higher shopping bills to the North at a time when we can’t afford to be losing any business or spend on this side of the border. It will put businesses here under enormous pressure to stay afloat.