Will UK VAT Rise in Budget
March 15th, 2010 | by The Vat Man |This is a guest post by Thornton Sports an artificial grass supplier in Ireland.
Many Southern Irish Businesses would welcome a rise in UK VAT rates especially businesses around the boarder area. The current UK VAT rate of 17.5% is 4% lower than the Irish rate of 21.5%. This has been hurting Irish businesses for quite some time.
At one point during the last few years the difference in the VAT rates between the two countries had risen to 6% - this along with the drop in value of sterling had a crushing effect on business south of the boarder, more so those that were retail businesses.
Last year there was a one day strike by the public sector in the south of Ireland, that evening and the next day the TV news and newspapers were full of pictures of people travelling north to shop. It was reported that this huge amount on that day was down to the public sector heading north to spend. This would have been much less of an issue if the same people had been out shopping in shopping centers all over the south of Ireland, but because they were shopping in the north many commentators were questioning their patriotism.
However this is a strange area for commentators and the government to complain about. Ireland has the lowest company taxation rate in Europe - the lower corporation tax band has been used to attract many multi-nationals to Ireland. The tax rate for these companies is 12.5% compared to the UK rate of 35% - however there is little complaint from the UK press and public on this area.
There are though many areas of difference between the two countries that would encourage people living close to the boarder to cross back and forward, the difference on fuel duty, the big differences on alcohol and cigarettes. However without these differences cause by government taxation the cost of food has always been much lower in the North of Ireland, which raises questions of the main retailers over the whole country.
Many of these retailers have blamed government taxation policy for the differences in costs north and south of the boarder. However the big supermarket chains appear to charge different prices for the same items in stores that are only miles apart.
Now though we play the waiting game on two fronts, will the south become more competitive in these harder times and will the UK VAT rate rise?