Monday, 25 August 2014
Retail Ireland, the Ibec group that represents the retail sector, today said the upcoming budget was a chance to give some money back to consumers through tax cuts and, in doing so, boost spending and jobs in the retail sector. With sales of big ticket items like cars and furniture on the up, and consumer sentiment at a seven year high, the government now has the chance to secure the retail recovery.
If the momentum is maintained Retail Ireland predicted consumer spending will rise 1.9% this year, and 2.9% next year. More up-beat consumers are also saving less, the savings rate increased to 16.1% in 2009 but is now falling back towards a more normal 8%. It is vital that the budget supports these positive trends, especially as stronger growth means a much smaller economic adjustment is needed than was initially envisaged.
In its Budget 2015 submission
, Retail Ireland called for income tax reductions, a cut in excise duty, no increases to the cost of doing business and new incentives for retailers to develop vacant lots in town centres. The group also called for the retention of the successful reduced 9% VAT rate on tourism-related services, and for consideration to be given to replicating this approach in other sectors.
Retail Ireland Chairman Frank Gleeson said: "Sales have grown every month this year, but the retail recovery shouldn't be taken for granted. Tax cuts will boost disposable income and increase spending in the domestic economy. This will translate into thousands of new retail jobs."
Retail Ireland's budget submission sets out five key priorities for Budget 2015:
- Impose no new costs on retailers and make it cost-effective for retailers to hire new staff by reversing last year's changes to employers' PRSI
- Cut income taxation so consumers have more money to spend
- Freeze or reduce other consumer taxes, such as excise duties on alcohol which are among the highest in Europe
- Incentivise retailer investment in town centres and encourage use of vacant outlets
- Support consumer confidence by "confidence checking" Government announcements
"So far this year we have seen huge growth in the sale of big ticket items, such as cars and furniture. This is spending that was deferred during the recession. Food, fuel and clothing sales have also improved, but from a low base. A lot of the growth has been on the back of reduced prices due to intense competition. The average shopper now visits up to four supermarkets every month to get the best deals. The retail recovery has some way to go.
"Retail was on the very sharp end of the recession. 50,000 jobs were lost and many businesses closed. Despite this, with 270,000 employees the sector remains Ireland's largest and most geographically diverse. Now is a critical time for retail, with intense competition keeping prices down, the decisions on budget day must ensure the recovery continues and gathers pace."