‘Hundreds of Galway jobs to be lost’ due to VAT hike

Date Published: {J}

BY ENDA CUNNINGHAM

An increase in the upper rate of VAT in next month’s Budget will cost hundreds of jobs in Galway – particularly in the retail sector – and make for an “extremely bleak” Christmas, consumer and business leaders have warned.

And businesses across the city and county which have so far managed to weather the storm of the economic downturn are facing closure in the New Year, Galway Chamber of Commerce has warned.

They described the VAT hike as a “draconian measure” which will see hundreds of jobs lost here as consumer spending tightens even further.

Michael Coyle, Chief Executive of the Chamber said he was “astounded” at the proposal by Finance Minister Michael Noonan to increase the higher VAT by 2% to 23% in Budget 2012, which will be unveiled on Tuesday, December 6.

He said Christmas and New Year sales are the ‘bread and butter’ of many retailers – which sees them through the traditionally tough first quarter of each year – and a hike before the ‘shopping day’ on December 8 would destroy many businesses.

“To target VAT as a potential area of increasing Exchequer Returns just defies logic. The VAT take nationally is already €400m behind where it should be, how is this going to increase spending?

“It’s a draconian measure. I was astounded when I heard it. It will have an extremely negative impact on the retail sector.

“We launched the Sp€nd Christmas in Galway campaign 10 years ago, to discourage people going to the States with empty suitcases. Now we have a job to get consumers out their front doors. Consumer spending is at an all time low, this will make it even worse.

“This is the fourth year in a row that the retail sector in Galway will have a tough Christmas. This time of year accounts for 20% of business and gets them through the quiet months until the tourism season kicks in. Many retailers are deep into their reserves already, and another bad winter will see them go under.

“I firmly believe this will cost jobs – many retailers are already in a precarious situation because the margin between staying in business and not is so fine,” said Mr Coyle.

Michael Kilcoyne, Chairman of the Consumers’ Association of Ireland told the Connacht Tribune: “A VAT increase will have an impact on people right across the board, and on the poor more than the wealthy, and then it’s likely that the next rate adjustment will be the lower rate of 13.5% increasing to 15.5% next year.

“2% is a lot of money to people that don’t have it – petrol will go up, there will be the carbon tax, practically everything you buy will increase in price. People just won’t be able to afford items.

“And if you take an average family with three kids – they will lose €360 in children’s allowance. That’s a week’s wages to some people.

“This is going to cost hundreds of jobs in Galway, there’s no doubt about it,” said Mr Kilcoyne.