Retailers Seek Excise Duty Freeze

Business & Finance - Industry

Monday, 28 November 2011 11:45

Written by Conor Joyce

Retail Ireland, the IBEC group that represents the Irish retail sector, today set out its pre-budget submission, which called for no increase in excise duty.

The group also outlined its firm opposition to any move to shift the cost of sick pay onto businesses, many of which are struggling to stay afloat, and called for decisive action to tackle diesel laundering and tobacco smuggling.

Retail Ireland Chairman Frank Gleeson said: “Retail sales have fallen by over 20% since 2008 due to the recession and price reductions. At the same time the savings ratio has increased from approximately 2% to 12% due weak consumer confidence. The Budget will have an enormous impact on the crucial pre-Christmas shopping period and should contain measures that boost consumer confidence and get people spending again. The budget adjustment must focus on reducing expenditure as opposed to tax increases, as this is less damaging to growth and recovery.

“It was confirmed recently that VAT is to increase by 2% in the forthcoming Budget, which will depress consumer spending and hit the already struggling retail sector. In view of the negative effect that this will have on retail sales, it is essential that excise is not increased in the budget. In addition, Government should not proceed with the proposal that employers pay the first four weeks of employees’ sick leave. This would represent a very significant additional annual cost for retailers and would damage the sector’s capacity to retain employment. The retail sector needs support, not measures that increase its costs.

“Retail Ireland proposes that the Budget contain a vigorous campaign against diesel laundering, tobacco smuggling and the sale of counterfeit branded merchandise. These various forms of crime cost the Exchequer hundreds of millions of euro in lost taxation and cost the retail sector similar amounts in lost sales. Resources put into such a campaign would result in enormous savings to the Exchequer.

“The VAT increase makes it essential that urgent action is taken through legislation to assist retailers struggling because of unsustainable rents. In addition, next year consideration should be given to moving the Budget to earlier in the year and away from the vital pre-Christmas trading period.

“As we enter the critical pre-Christmas shopping period decisive action is needed to encourage consumers to spend some of the 12% of income currently saved. There should not be any further increases in taxation on consumers on budget day and the necessary adjustment in the public finances should be made through reducing public expenditure.”