VAT Rate Change

While it has been widely argued that the UK VAT rate change has not made a significant impact, shop owners in Northern Ireland have been experience an unexpected, but very positive side affect. Prompted by high tax rates, a strong Euro and a need to save money, many shoppers from the Republic of Ireland have been making the journey north to shop in the UK, where the VAT rate is only 15%, after being cut from 17.5% last year. The VAT rate in the Republic, by contrast, is 21.5% In the past year, visitors to Northern Ireland from the republic have grown by at least 25%. At least in part, this can be credited to the ever growing numbers of people taking advantage of the UK VAT rate change and shopping in the UK. Many families from the Republic can save up to £200 (EUR 230 a month) by taking advantage of the lower VAT rates in the UK. Retailers in Ireland are feeling the strain of all this. Rent is still high, being a legacy from the healthier economic climate of 2 years ago, and the government seem unwilling to initiate a VAT rate change of their own, to bring their current 21.5% VAT rate more in line with the UK VAT rate of 15%. In an attempt to combat everything that is happening, many retailers in Ireland have begun to lower prices. Major players, such as Tesco and Marks & Spencer have reduced their prices by anything up to 20%, in an attempt to tempt back shoppers who would otherwise travel north. In lieu of a VAT rate change of Ireland's own, it seems to be about the only option available to many of these stores.