“every euro you spend in your local community is a stake in the community”

The Irish government’s criticism of those un-patriotic shoppers just got a little more pointed. From the Irish Times

Referring to cross-Border shopping, the Tánaiste said that most people shopping in the North “go to get alcohol. It’s true. People who don’t have a lot of money are not the people going shopping in their cars across the Border”.

She said that “every euro you spend in your local community is a stake in the community”. It was making a positive contribution to keeping jobs in the community, and shoppers could do that or give it “to her majesty’s government”.

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  • Mack

    Or she could cut VAT and drive down business costs in the south so the trade flow reverses. In the Internet age this has to be done regardless. More and more shopping, especially big ticket items is migrating online.

    She could mitigate any cut in VAT with a cut in tax credits and a perhaps even (although proportionally smaller) cut in welfare rates (welfare recipients would more than make up the difference in lower costs)..

  • She’s a useless, awful curmudgeon of a woman, a Mrs Malaprop for our age. I’d rather get value for money than a stake in a community the Irish government is apparently keen to dismantle through its economic policy.

  • Nordie Northsider

    Fianna Fáil – The Partitionist Party

  • George

    Mack,
    any cut in the VAT rate would be just a drop in the ocean compared to the drop in value of sterling.

    Anyway, the UK is going to up its VAT rate to 17.5% from 15% on January 1.

    Also, there is talk that it could go as high as 20% in the UK by the end of 2010 as Brown is currently running an annual 200 billion deficit.

    With deflation of 6% south of the border and inflationary pressures starting because of the weakness of sterling north of it, the pricing gap won’t be as large sooner rather than later.

    For that reason and the lost revenues from a cut in VAT, I don’t see any drop in VAT south of the border.

  • Itwas SammyMcNally whatdoneit

    The Irish government should stop whinging and negotiate a two-way deal with the British to work towards Vat (and corporation tax) harmonisation as it will no doubt swing the other way (again) as it has done in the past – or perhaps we need a refund system to overcome the problems the border is causing (whilst it is still with us)with all the vat collected for goods bought on Irish registered credit/debit cards (with addresses in ROI) should be handed back at the end of the year (and vice versa).

  • New Blue

    Sammy

    Are you saying that every penny of VAT spent by a UK citizen in ROI should be claimed back by HMG?

  • heck

    do I detect a double standard here? When Slab Murphy was accused of buying cartons of cigarettes in dundalk and taking them to crossmaglen bloggers on this site went ape shit with rage. Now there seems to be glee that the flow is the other way.

  • Itwas SammyMcNally whatdoneit

    No, every penny spent on certain items e.g. food and drink in supermarkets should be for those with credit cards registered in Norn Iron.

  • DC

    Basically buy like mad, spend 100s worth now on alcohol while you still can and store it in the house and sell it to those that can’t drive up for a little mark up price locally.

    The whole idea of the UK VAT cuts etc was to bring spending forward a year, which is why it is going back up next year.

    M’on up yousens, but fast as you can now, fast as you can and bring your credit cards too – max em out as we will all be hunkering down in 2010.

    But hey it’s two way you know:

    http://news.bbc.co.uk/1/hi/northern_ireland/8362606.stm

  • Itwas SammyMcNally whatdoneit

    …having said that smuggling revenues or partition compensation tax (PCT) has supplied the start-up capital (and cash flow) for many of the largest companies on both sides of the border since the evil deed was done.

  • Owen Lee Joe King

    Be patriotic! Buy Irish. Shop in Doire and in Beal Feirste !!!
    Erin go bragh. Free State partitionists – bah !

  • Just had a thought. Since the Tanaiste is from Donegal, I wonder would any Derry retailer like to step forward and declare how proud he is of the fact that Contrary Mary patronised his shop – at least before the State car came along… ?

  • Mack

    George –

    The drop in Sterling is a one-off event & given that we import a lot more goods from the UK than we export to their – one which is of net benefit to us.

    Once Sterling has fallen (and the biggest drops are over a year in the past) – external imports get more expensive for them & their exports get cheaper. I.e. once current stocks are run-down, if everything else were equal, retailers would be able to match prices on each side of the border.

    My point is though – all else is not equal. Rents, rates, electricity, professional fees & VAT are higher in the south.

  • Henry94

    Well done Mary, you’ve found the last refuge. The working man has no country. Just like Fianna Fails tax-exile donors. Not to mention their tax-dodging leaders.

  • DC

    “My point is though – all else is not equal. Rents, rates, electricity, professional fees & VAT are higher in the south.”

    But to be fair Belfast isn’t really a proper comparison point I think it is more relevant to try and compare Dublin versus London say in terms of using capital cities. And the obvious appeal and pulling power of that ‘big city’ symbolism.

    In Belfast we are still trying to kick start a private sector economy here, at least you guys have or did have a decent one, till Bertie and Fianna Fail failed to apply the brakes on housing speculations and credit. Bit like Brown’s own bubble leading to boom and not quite bust as public finance spending has staved that off at the mo.

    I will raise a glass next year in sympathy when we, across the isle(s), hunker down together in the doldrums.

  • Dave

    [i]It was making a positive contribution to keeping jobs in the community, and shoppers could do that or give it “to her majesty’s government”.[/i]

    It’s very unkind of the Irish government to point out the simple reality that so-called northern nationalists have been converted into patriotic British citizens, serving the national interests of the British state.

  • Dave

    The Irish government should also follow this logic on cross-border issues and dismantle them, since these are being used to leech investment from the Irish state into the United Kingdom. It is that expedient mixed political message which deliberately confuses Irish citizens about the difference between “ireland” and “the island of Ireland.” The saps who buy goods in Northern Ireland unwittingly think they are buying goods in Ireland and not in the United Kingdom since that is the false message that this “all-Ireland economy” crap aimed at supporting the present internal settlement was designed to reinforce.

  • Itwas SammyMcNally whatdoneit

    Mack,

    there is a strong opinion amongst those who claim knowledge of the currency markets that the Euro will be on parity with Engleze Pound although as we might expect there is another group of experts claiming exactly the opposite.

    It is hard to see past the first scenario as Britian’s debt mounts and they allegedly have only one more batch of pounds to print before the markets start to turn firmly against them.

  • heck

    If the Irish government had worked to dismantle the border then this problem would not exist

  • Mack

    It Was Sammy

    They may well be right, and we’d take another 10% hit until current stocks are run down / British inflation pushes up prices there.

    DC

    That’s true – but Irish retailers are competing with British based retailers with an online presence. We priced a car seat recently in Dublin, then bought it online – from the UK – for almost half the price. There is no VAT on car seats in the UK AFAIK. On the web, everyone is your neighbour..

  • George

    Mack,
    Ireland’s exporters won’t see sterling’s drop as advantageous.

    The advantages of which you speak will take time to filter down (if they aren’t outweighed by the destruction of the export sector by the high value of the euro).

    We’ll know in the next 2 years.

    My point is though – all else is not equal. Rents, rates, electricity, professional fees & VAT are higher in the south.

    If sterling stays where it is over the medium term then British energy costs and inflation are going to rocket.

    Also, as I’ve already pointed out, VAT rates could be approaching Irish levels as soon as the end of 2010. They are going up 2.5% in six weeks’ time, for a start.

    Add to that the potential tax rises, which most certainly could include rates, and the playing field might be a lot more level.

    Anyway, all this talk about loss of revenue doesn’t take into account the gains from those buying fuel south of the border. This is one big reason why I wouldn’t go with Sammy’s idea if it was possible.

    It’s swings and roundabouts.

  • DC

    Which is why Mack I fear that Britain may be pressed hard in terms of opting out of euro but still being allowed access to all the privileges of EU internal markets.

    Im not sure if I said this yet but I have been thinking it: David Cameron may well face a few questions that are posed his way from Europe’s political elite.

    A Labour government that went Centre-Right on the war front was a surprise to many but a Tory one going pro-Europe by force (as like the war-on-terror) may well be another surprise to come our way.

  • Itwas SammyMcNally whatdoneit

    George,

    re. “It’s swings and roundabouts. ”

    It would be interesting to see the (net) figures.

    DC,

    I agree the Englezes want to benefit from the club and then spend their time denigrating the other members and the club itself – if the pound goes below parity with the Euro then there may be a belated shift in policy on the independence of Sterling. As we in Ireland found out between the 2 referenda saying “NO” to Europe can be a luxury who may not always be able to afford.

  • George

    Itwas SammyMcNally whatdoneit,
    It would be interesting to see the (net) figures.

    According to Hansard, it’s around 260 million pounds a year in tax (last year I could find was 2006) lost to the British exchequer but that doesn’t differentiate between illegal fuel and that bought south of the border.

    http://www.publications.parliament.uk/pa/ld200708/ldhansrd/text/81114w0001.htm

    The estimated Irish government loss in VAT and excise in 2009 (high estimate) is put at 112 million euros.

    http://www.finance.gov.ie/documents/publications/reports/2009/crossborderefb09.pdf

  • Congal Claen

    Hi All,

    Cross border shopping is a mere drop in the ocean compared to the coming storm that will rage for a few years as Euro base rate is increased. The Eurozone is already coming out of recession. Interest rates will rise regardless of the Republic’s need for low rates. Much in the same way that they stayed low, fuelling the property bubble, when the republic needed higher rates. It’s gonna be rough for a good few years…

  • Dave

    Mack, you miss the point of the Irish government’s appeal. It is simply pointing out that Irish people are neglecting the national interest by paying taxes to a foreign state and by transferring employment from the Irish state to that foreign state. If they continue to neglect the national interest, then the obvious consequence of that behaviour is less taxes for the Irish state and less jobs for the Irish state. In other words, they are harming themselves collectively by acting to benefit themselves individually. Other issues such are secondary even if they can are related.

    It is not the case that the citizens of Northern Ireland are acting independently of the national interest since they are actively promoting that national interest by seeking to benefit from this transfer from the Irish state to the British state. They are, of course, actively promoting the British national interest. They are good Shinner-led ‘republicans.’

    Irish people need to show some of the patriotism for the Irish state that these British citizens of Northern are showing for the British state.

  • Joe

    F-off Fianna Fail! I will shop where prices are best, anywhere on my island.

    I WILL NOT be dictated to. Especially by a party with no popular support. Your vision is flawed.

    Sincerely,
    Irish voter.

  • Dave

    Fair enough, Joe. However, hopefully you will also kindly fuck off when you demand services from this state such as health care and pensions paid for by those who pay their taxes to this state in order to benefit its citizens. If you want to pay your taxes to another state and to serve its national interest, then go lodge your claim their instead. Sadly for you, they’ll tell you that although you have contributed taxes to their state via VAT, you are not entitled to benefit from their state in the matter of said health care and pensions.

  • Joe

    Dave,

    The money people spend in the north/online/on holiday in Malaga/etc is their own private wealth. It is their right to spend it how they like. Thats called liberty.

  • Itwas SammyMcNally whatdoneit

    George,

    thanks for that.

    Without both set of figures (stripped of smuggling) we simply dont know who is benefiting the most from the price differentials.

    Pete Baker,

    can we task you to go and find this out?

  • JokerN

    Dave

    Presumably that warning will also appear at Dublin airport and at the border so all tourists and people travelling from the north know that they lose their rights to state services when they spend in Dublin? Oh – and everywhere else?
    Grow up.
    The fact is that the south is not competitive on price (or convenience for alot of folk – Belfast, Lisburn & Newry are far handier than Dublin) so people will travel.
    Its probably not forever and politicians should probably keep quiet about it so they dont look stupid.

  • Mack

    It was Sammy –

    Without both set of figures (stripped of smuggling) we simply dont know who is benefiting the most from the price differentials.

    That’s probably true for NI / the south. We do know that the south benefits hugely from weak sterling. 38.3% of our imports come from the UK, while only 18.7% of our exports go their. Clearly weak Sterling is hugely advantageous to Ireland.

    http://www.theodora.com/wfbcurrent/ireland/ireland_economy.html

  • Itwas SammyMcNally whatdoneit

    Mack,

    thanks for that.

    Surely the point is that without the net figures i.e. who benefits most from cross border trade Ireland (Southern Territories) cant complain about people travelling to the Northern Territories to spend money in supermarkets when they may be getting even more from people travelling in the opposite direction to buy petrol.

  • Captain Moonlight

    Is there any chance the [i]Ancien Regime[/i] would cop the hell on and reduce VAT to price shoppers back into the Republic? In my opinion, none. They are determined to enforce a deflationary fiscal policy and will screw the ordinary taxpayer again in the upcoming budget.

    The [i]Ancien Regime[/i] will prove its unfitness to govern yet again in December. Small wonder I hear of the return of the Black Economy and that many of us will deny the government revenue by shopping North this Christmas, if we can still afford one.

    They would do well to remember that government requires the consent of the governed.

  • John East Belfast

    Mack

    “38.3% of our imports come from the UK, while only 18.7% of our exports go their. Clearly weak Sterling is hugely advantageous to Ireland”

    That is a rather unusual view of having a strong currency during a recession if I may say ?

    Surely the ROI wants to be exporting more and importing less – not making the latter cheaper ? At this rate within a year that 38.3 and 18.7 will have become 50 and 10 – I dont think that is success ?

    The strong Euro v the dollar wont do your exports any favours either.

    You might argue your fuel will be cheaper but if you are not sending anything out the other way you wont be able to pay for it anyway

    No matter what way you look at it the ROI needs a weaker currency.

  • Mack

    JEB –

    will have become 50 and 10 – I dont think that is success ?

    Why not? If weaker sterling reduces the costs of imported inputs into exports then Irish companies with established relationships with British suppliers may well be able to outcompete our Eurozone competitors where we have them.

    No matter what way you look at it the ROI needs a weaker currency.

    The Euro is probably too strong for us it’s true. But Irish exports have actually increased during this recession (compare that with Germany and China!) – it’s the domestic economy that has collapsed. Is it tenable we follow the Dollar all the way to the bottom? I don’t think so, as the Dollar falls in value Euro profits will be more important to US companies..

  • paddy

    no matter how hard times get in ireland there will always be money for drink its always been the case long may it continue

  • Dave

    Irish exports did not grow in 2008. They fell 2,832m in 2008 from their level in 2007. The only growth in Irish exports in 2008 in occurred in sectors that are not price-sensitive (i.e pharmaceuticals, where users must have their medication irrespective of the higher cost of importing it), masking the decline in sectors outside of that lucky sector.

    Irish exports have declined by 9% since the Eurozone kicked in, while the UK’s exports have grown by 58% during the same period. In other words, we have not stood still as the worst outcome of locking exports into an overpriced currency but are going backwards years to a level we were at a decade ago in 2000 (83,889) while we achieved export growth of 460% in the previous decade of 1990 to 2000 prior to joining the eurozone. That was the actual Celtic Tiger period, which was duly shot by putting a political agenda of EU integration before an economic agenda.

    Incidentally, circa 5% of Irish exports are phantom exports. They don’t exist, being the creation of missing trader fraud (carousel and contra-trading). This fraud costs taxpayers within the EU’s member states an estimated £170 billion a year. It is just another hidden cost of EU membership, costing Irish taxpayers billions every year.

  • Dave

    By the way, here are the official CSO stats for exports in 2007 and 2008:

    2007 89,226,100
    2008 86,394,400

  • Mack

    Apologies Dave, exports increased in the first quarter of 2009, but have fallen slightly over the course of the reccession. A 3% fall is miniscule compared with what is happening elsewhere..

    http://www.ronanlyons.com/2009/06/29/the-global-recession-is-just-a-coincidence-for-ireland/

  • Brit

    Come on chaps. We live in a global market place now, and certainly an open European market place. Surely the time for patriotic buying is over.

    I suppose I might consider “buying British” if everything else was equal (and indeed there are quality and ethical reasons for buying “local” produce) but usually things arn’t and I’ll buy on the basis of value not origin. With limited time and a screaming kid in tow there is not time to check labels anyway.

    Except of course I will always choose Israeli avocados just to see the looks of horror from the keffiyeh wearing middle class bien pensants.

  • John East Belfast

    Mack

    Why not? If weaker sterling reduces the costs of imported inputs into exports then Irish companies with established relationships with British suppliers may well be able to outcompete our Eurozone competitors where we have them.

    Come on ! Your Eurozone competitors will be just as able to buy those British goods using the Euro – it doesnt give the ROI a competitive advantage against Euroland and with higher costs of doing business – rents and labour – it soldifies your disdvantage.

    Meanwhile your nearest neighbour and land border neighbour will be decimating your retail industry and what’s left of your cosntruction and manufacturing industries

  • Mack

    JEB –

    Come on ! Your Eurozone competitors will be just as able to buy those British goods using the Euro – it doesnt give the ROI a competitive advantage against Euroland and with higher costs of doing business – rents and labour – it soldifies your disdvantage.

    Well, I was answering the specific question you set. If exports to the UK fall to 10% of total exports, then exports to other countries as a proportion of the total must be increasing -at a minimum exports to the UK would have to be falling faster than total exports, but we’ve seen that Irish exports have held up well in this recession and have even been increasing this year even after Sterling weakened significantly in late 2008.

    At the same time for imports from the UK to rise to 50% of the total, imports from other countries must be proportionally decreasing. Or to put it another way – our exports to the Eurozone are likely to be increasing relative to our imports from the Eurozone., which doesn’t sound like a situation where we are being out-competed on the export front?

    There are other issues around retail – eventually this period of pressure will lead to oversupply of properties and thus falling rents (as retailers shut up shop), the minimum wage may have to be reduced – or new techology and processes introduced so we can compete.

  • Mack

    JEB –

    Another way of looking at – a large portion of Ireland’s exports are generated by the MNC sector & they import a lot of their inputs. If Ireland’s Euro exports – priced in Euro’s, hold up, while Ireland’s imports – priced in Sterling, get cheaper, then exporting to Eurozone countries using British inputs is getting more profitable, not less.

    Unless you think that weaker Sterling, trumps Ireland’s corpo tax rate and the MNC’s will relocate?