Retailers bank on budget scrap

Furious lobbying is taking place behind the scenes in an attempt to convince Minister for Finance Michael Noonan to add a little retail therapy to this month's budget.

The industry has been hit hard by the downturn, with shoppers still fretting over big- ticket purchases. A tsunami of water charges, property taxes and other fiscal nasties tends to have that effect on consumer confidence.

A key budget recommendation of the Retail Consultation Forum, which brings together State and industry groups, is for a white-goods scrappage scheme. Customers would get a VAT-driven incentive to trade in their old washing machines and dishwashers and so on for new, more energy-efficient ones.

Retail Excellence Ireland (REI), a forum member and vocal lobbying group representing 11,500 shops, has in recent weeks been bending the ears of top-level officials at meetings in the departments of energy, the environment and finance. It has also hit upon a timely pitch for the scheme that may catch the ear of politicians: reducing the burden of water charges.

Washing machines use upwards of 12,000 litres of water a year, at the average rate of 220 uses a year calculated by REI’s consultants.

Top energy-rated A+++ machines, which last year accounted for a quarter of the 131,000 washing machines sold in the Republic, use less water and electricity than lower-graded guzzlers. Half of new machine are lower-efficiency A grades, REI says.

The retail industry says such a scrappage scheme would cost the State €15 million up front. But when people buy one new white good, it argues, they usually buy another at the same time: a new dryer to go with the new washer, etc.

REI is trying to convince officials that VAT on these extra purchases will make up the VAT shortfall. It could be a cheap way for Noonan to signal he is cognizant of the weight of water and energy charges on hard-pressed families.