VAT reduction of 23% to 21% would stimulate retail sector
ISME, the Irish SME Association at the release of the CSO retail sales index is concerned with the latest decline in monthly retail sales.
Seasonally adjusted, the volume of retail sales decreased by 2.4% in the month of September, with an annual increase of 1.2%. There was a decrease of 4.4% in the value of retail sales in September 2017 when compared with August 2017 and there was an annual decrease of 1.6% when compared with September 2016.
Commenting on today’s figures, ISME CEO Neil McDonnell said “The recent 3% increase in Budget 2018 to the National Minimum Wage will do nothing to help low paid workers deal with growing costs of living, but it will exacerbate the precarious nature of the retail sector for everyone.”
The main issues facing retailers are:
Very low margins, as evidenced by the CSO figures.
Negative cross border trade.
Excessive business costs such as insurance, rates, and development charges.
Lack of adequate broadband.
Social welfare anomalies and inflexibilities.
Insufficient bank credit availability for retail SMEs.
The surge in the Hidden (Black) Economy.
“According to the recent KBC Bank/ESRI sentiment index, consumer sentiment and spending has declined, falling from 105.1 to 102.9. This creates an added pressure on the retail sector. Had Government reduced the VAT rate from 23% to 21% this would have provided the retail sector with a needed boost.”