VAT cut 'needed to boost consumer confidence'

Date: 25th August 2009

The Irish government has been urged to reverse its recently-introduced VAT increase in order to help boost consumer confidence in the country.

Finance minister Brian Lenihan moved to increase the rate of VAT from 21 per cent to 21.5 per cent in the emergency Budget of October 2008, citing the need to boost tax revenues as the main reason behind the move.

However, with consumer confidence having continued to decline since then, Mr Lenihan's own party colleagues have now even stepped up calls for a VAT re-think.

Michael McGrath, TD for Cork South Central, has now said that a cut will give a much-needed boost to customer confidence and therefore high street spend.

"It was a mistake and it has caused a lot of damage to businesses around the country," he told the Sunday Independent.

"The CSO figures show we lose about €700 million in trade to the North and consumer confidence is rock bottom."

Meanwhile, Dublin's stock exchange, the ISEQ index of shares, has moved above the 3,000 mark for the first time in ten months, boosting hopes that the national economy is now on the rise again.