VAT Rate Change

News is emerging that concerned border towns in Ireland are calling for Finance minister Brian Lenihan to cut VAT by 6% from 21% to 15% in line with the UK's announced VAT rate change. Irish towns that border with the UK run the risk of shoppers deciding to take advantage of the strong exchange rate and the lower VAT rate in the UK and doing their christmas shopping across the border. Lenihan has admitted that the large numbers of Republican shoppers travelling north to shop in Northern Ireland was making things "very, very difficult" but as of yet has not annouced any plans to reduce the Irish VAT rate in line with the UK VAT rate. Article Continues Below: However, the 6% cut that is being called for by many politicians in Ireland would cause a significant 'black hole' in the country's revenue. Each year, VAT in Ireland is worth an estimated £6.7 billion. Cutting this by 6% would mean loosing out on just under £2 billion in the next year, or £166 million a month if the cut lasted less than a year. This would be a huge strain to the Irish ecnomomy, one that is straining already, and may highlight a key reason as to why Irish ministers have been reluctant to this point in following the UK's lead.