Shopping in North to cost exchequer €430m in lost tax

CROSS-BORDER shopping will cost the Exchequer almost €430 million in lost tax revenues, according to new analysis by Ibec.

The business group said the direct loss of VAT and excise duty as a result of consumers shopping in Northern Ireland would amount to €190 million this year.

Some 9,800 jobs will have been lost in the retail sector and food industry this year as a result of the shopping trends, Ibec said, with the income tax loss and welfare costs arriving at €200 million.

The direct loss of VAT and employment due to “incidental spend” during cross-Border shopping trips, such as lunches, will strip the Exchequer of a further €40 million, it estimates.

Ibec has called on the Government to reduce immediately excise duties on alcohol in its pre-budget submission on the basis of feedback from the retail industry that suggests the primary motivation for cross-Border shopping trips is cheaper alcohol. A “substantial” spend on other goods then occurs as a result of the trips.

Ibec blamed the weakness in sterling and temporary reductions in VAT rates for “substantially” increasing the price differential in retail prices between the Republic and Northern Ireland.

TNS data shows that Northern stores have 2.6 per cent of the Irish grocery market, business worth some €900 million. Nielsen data suggests 10 per cent of the off-licence trade has been lost, or €260 million.

The business group’s figures are far higher than estimates published by the Central Statistics Office (CSO) and the Revenue Commissioners in March.

The CSO and the Revenue had expected the value of cross-Border shopping to rise by €100-€150 million this year, or to an annual value of €700 million at most, with the cost to the Exchequer rising to not more than €112 million.

However, InterTrade Ireland said at the weekend that the value of cross-Border shopping will increase to €810 million this year.

Yesterday, the Outlet in Banbridge, Northern Ireland, said it had recorded its biggest surge in euro shoppers to date this year, with one in two shoppers coming from the Republic.