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Ireland needs all-island VAT harmonisation

24 December, 2008

Speaking in advance of the post Christmas sales Sinn Féin Economic Spokesperson Arthur Morgan TD has called on the government to meet with the British Chancellor of the Exchequer to progress harmonising VAT rates across the island of Ireland.

The Louth TD said:

“The existence of two tax regimes on this small island simply does not make sense. This approach by both governments continues to foster economic distortions across the island. It also adds to the historic border county economic instability and social deprivation created by partition.  

“In the run up to Budget 2009 Sinn Féin called for a 2% reduction in VAT to boost the incomes of low and middle income earning families and stimulate consumer spending.  

“This measure could have gone some way to address the VAT differential on the island. Families and businesses throughout Donegal, Cavan, Monaghan and Leitrim have traditionally been hardest hit by partition. Alarmingly the government actually chose to increase VAT whilst the British Chancellor of the Exchequer dropped VAT on a wide range of items to just 15%.

“In advance of the changes to VAT rates north and south Sinn Féin called on Finance Minister Brian Lenihan to seek a meeting with the British Chancellor of the Exchequer to begin the process of harmonising taxation on the island. The reality for businesses and families throughout the island is that an all Ireland economy is the only affordable option. To date the Minister has not secured such a meeting and many hundreds of SMEs and small retailers are paying a heavy price for the Minister’s inaction. 

“Whilst the Assembly must of course continue to seek sufficient fiscal autonomy to manage the present economic realities, it is obvious that the island’s future lies in an all Ireland economic agenda. We need to create a fair playing field for businesses, particularly for retailers across the border counties when it comes to taxation with a particular emphasis on VAT.  

“Today consumers and businesses in the six counties are benefiting from the British government’s decision to reduce VAT, while those in the 26 are hit with a further increase. Tomorrow the shoe could be on the other foot.  

 “The only progressive way forward for the development of this island’s economic future is for the process of an all Ireland economic framework to begin. VAT harmonisation across the island would be an important first step in this process.” ENDS

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