Top economist warns of VAT-back ‘disaster’ for retail and tourism

From this week’s Galway City Tribune – Changes to the VAT rebate scheme for non-EU tourists could spell disaster for the retail and tourism sectors in Galway, a leading economist has warned.

As part of the Government’s Brexit Bill, the so-called Retail Export Scheme which allows non-EU tourists to claim VAT refunds on Irish crafts and gifts will soon be limited to purchases in excess of €175 – there had previously been no such limit in place.

The refund scheme is currently availed of by hordes of American and Chinese tourists to reclaim the tax applied to gifts purchased from Galway retailers.

Jim Power, one of the country’s top economists, has compiled a report looking at the potential impact of this move and has predicted that Galway suffer significant job losses and business closures if the Government doesn’t row back on this proposal.

Mr Power said that almost 85% of refunds under the current scheme are less than €175, adding that existing scheme provides invaluable support to small family-run retailers in Galway.

“The Retail Export Scheme contributes €108.1 million to the economy, with a large proportion of this spent outside Dublin. The proposed new legislation will risk many jobs in Galway and will put people out of business. It is crystal clear that economic activity, employment and the overall health of the retail and tourism sectors in Galway are at risk.

“Introducing the €175 limit on the Retail Export Scheme could undermine competitiveness and decimate the Irish tourism and retail sectors, particularly along the Wild Atlantic Way,” said Mr Power.

Aidan Daly, who works for Galway-based Planet – a company which provides tax refund and international payment services, employing around 250 people locally and 1,500 worldwide – said the new legislation will see reduced tourist numbers and reduced spending by those who do come.

“Roughly €10 million was spent in Galway in 2019 by non-EU tourists. If new legislation is passed, half of this spend is at risk, as this accounts for all goods sold in Galway under €175.
This is a shortened preview version of this article. To read the rest of the story, see this week’s Galway City Tribune. You can buy a digital edition HERE.