‘Government must cut VAT rate’
ALMOST half of retailers say the rising cost of business will send their shops to the wall, affecting main streets around the country, a survey shows.
Retail Excellence Ireland (REI) warned yesterday that the Government needs to ‘intervene urgently’ on the rapidly mounting costs of doing business by cutting the VAT rate. Shop owners say rising costs include ‘punitive’ labour costs such as the recently increased minimum wage and statutory sick pay, the Red Sea crisis leading to supply chain issues, and high interest rates.
Businesses say they can’t afford the rising costs, according to a survey by REI. Firms are also worried about new EU rules on repayment terms which will be introduced this year: they will have just 30 days to pay invoices. Administrative requirements, such as Revenue’s enhanced employer reporting, represent an additional burden, they say.
The survey also indicates 47% of retailers cannot accommodate the rising costs, while 83% have made changes to their operating model such as increased prices or reduced hours due to increasing costs. It was found that nearly half (46%) of businesses want a cut in the VAT rate; retailers want the 23% rate lowered to its pre-recession level of 21%. The rate was raised on January 1, 2012.
REI chief executive Jean McCabe said: ‘The Government is mistaken if it believes hard-pressed retailers can absorb a series of rapidly mounting labour costs, punitive repayment terms, and ongoing supply chain issues – and still remain in business.
‘The reality is that without significant financial support, specifically on VAT, we will see mass closures.’
She said the retail industry is the backbone of the Irish economy, accounting for almost one in ten jobs, adding: ‘Retailers are realistic and understand we are navigating choppy economic waters. However, the industry is being crucified on costs without any kind of meaningful relief.’
The REI’s Cost Of Doing Business Survey was conducted last month among 128 retail companies, with approximately 3,000 stores nationwide.