InBus_Win09_1-55:InBusiness 1-61 11/12/2009 16:13 Page 11
Chamber | NEWS
VAT Rate Cut Will Help
Union’s
Competitiveness
demands are
MINISTER FOR FINANCE,
unrealistic
Brian Lenihan, TD, has
addressed the contentious issue UNION LEADERS HAVE INDICATED that prolonged
of cross-border shopping by industrial action in the public sector is likely in 2010
announcing that the standard following the breakdown of talks between Unions and
rate of VAT will reduce by .5 per the Government. Union leaders had hoped that a ‘deal’
cent to 21 per cent with effect around a once-off unpaid leave period to replace the
from January 1st, 2010. This, Government’s plan to cut public sector pay would offer a
coupled with the announcement solution to address the need to service spiralling debt
of an increase in the UK Vat rate servicing costs. However, as the talks collapsed, Seán
to 17.5 per cent from UK Murphy, Deputy Chief Executive of Chambers Ireland
Chancellor of the Exchequer, said that: ““Public Sector Unions talk of a ‘deal’ around a
Alastair Darling, in his pre- once-off unpaid leave period does not go far enough to
budget report, will stem the flow fixing the hole in our national accounts. If this is the only
of shoppers from the South to offer on the table, then we will have failed to address the
the North. The reduction in Government’s borrowing of in excess of €400m per
excise duty on alcohol will also week to fund public sector pay, pensions, social welfare
contribute to the resolving the and our spiralling debt servicing costs. Talk of spreading
issue for southern retailers. the leave period over four years in some cases confirms
The Minister’s announcement that the Unions do not appear to be willing to address
Ian Talbot, Chief Executive of Chambers Ireland.
was welcomed by Chambers our underlying challenges in a systematic way.”
throughout the country, who “The Trade Unions are doing their public sector
believe that such a move was needed to help boost competitiveness. “The increase in members a huge disservice by suggesting that the
the rate of VAT in last year’s budget, coupled with the already high excise rates country’s finances can be rescued through sleight of
delivered a net loss to the Exchequer in terms of their combined impact on retail sales hand measures that simply serve to protect pay levels
south of the border,” said Ian Talbot, Chief Executive of Chambers Ireland. “The and work practices that are no longer sustainable. Failure
reduction in excise duties on alcohol and return in the rate of VAT to 21 per cent from to take tough measures now will merely lead to even
January 1st are welcomed and we expect a strong rebound in VAT revenues in 2010 as bigger pain in the future.”
a result,” he said. “The Unions must be honest with their members.
Toni Forrester, Chief Executive of Letterkenny Chamber, also welcomed the These negotiations are about helping their employer, the
announcement saying that the action taken by Government would revive consumer Government, meet the public sector pay and pension’s
confidence and help to stimulate retail trade, especially in border areas where the affects bill, the current amount of which is completely
of cross border shopping have been felt most. “The measures taken in the recent unsustainable and must be reduced urgently. The large
budget to combat our high VAT and excise rates, coupled with the announcement of numbers of private sector workers who lost their jobs this
the British Government to increase UK VAT rates to 17.5 per cent, will enable border year represent the hard decisions that private sector
towns to compete more successfully with their northern counterparts. This also sends a employers have had to and are likely to continue to have
signal to support our focus on competitiveness,” she said. to make if they cannot meet their costs,” he said.
++++++++++++++++++++++++++++++++++++++++++
Global Economic Index Rises for Third Consecutive Quarter
THE WORLD ECONOMIC CLIMATE conditions anticipated for the coming six business opportunities for many Irish
INDICATOR rose significantly in the third months, along with a more positive assessment companies looking to expand or diversify their
quarter of 2009 for the third consecutive time of the current situation,” said Ian Talbot, Chief offerings, while also reducing their
following the sharp drops of last year. The Executive of Chambers Ireland. “The survey environmental impact.”
indicator, published by the International supports the transition to a low carbon “While economic expectations are optimistic
Chamber of Commerce (ICC) and the Ifo economy with most experts believing that this almost everywhere, serious problems remain
Institute for Economic Research, rose to 90.4 can bring major business opportunities. In before the global economy will begin to
points from 78.7 points in July, with the Western Europe, 78 per cent of those expand again without government stimulus
economic climate improving in all major questioned saw business benefits in the packages. This confirms the importance of the
economic regions. This gives hope to Ireland’s transition, followed by Asia (71 per cent), the Irish Government’s efforts to underpin our
renewed effort to win new markets overseas. Near East (68 per cent), Central and Eastern banking system and contain costs, but also the
“The continued rise of the Global Economic Europe (66 per cent), and North America (63 need to restore confidence and Ireland’s
Index reflects the more favourable economic per cent). This transition could provide new international competitiveness,” he said.
InBusiness Winter 09 11
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