Changes being proposed to the VAT refund scheme, which encourages non-EU tourists to purchase crafts and gifts in Ireland, would have a serious impact on tourism and retail in Galway a report claims.
The Retail Export Scheme allows tourists from outside the EU to claim a VAT refund on Irish quality craft and gift items purchased here.
However, the Brexit Omnibus Bill which is currently moving through the Oireachtas would make significant changes to the eligibility of the scheme.
Under the proposed changes, any purchase which is for less than €175 would be excluded from claiming a VAT refund.
A report by economist Jim Powers said that these changes would “undermine the competitiveness” of tourism and retail businesses, particularly along the Wild Atlantic Way.
The report was commissioned by the ‘Stop Another Tourism Tax’ Campaign, an alliance of independent Irish retailers and tourism businesses.
It found that in 2019 there was €6.27 million in sales under the scheme made in Galway, which were for transactions of less than €175.
In terms of the sheer number of individual sales made, the report also said that 88.6% of purchases made in Galway, or 104,284 individual sales, were for less than the €175 threshold.
“The proposed new legislation will risk many jobs in Galway and will put people out of business,” Jim Powers said.
“It is crystal clear that economic activity, employment and the overall health of the retail and tourism sectors in Galway are at risk.”
“Introducing the €175 limit on the Retail Export Scheme would undermine competitiveness and decimate the Irish tourism and retail sectors, particularly along the Wild Atlantic Way.’’
Powers said that the Retail Export Scheme currently contributes roughly €108 million to the Irish economy, with a large proportion of this spent outside of Dublin.
“The tourism and retail sectors in Galway have been decimated by COVID-19 and they face a very challenging future. They need as much support as possible over the coming years.”
“Increasing the Retail Export Scheme threshold to €175 would not represent support, and it would totally fly in the face of the ongoing efforts to promote Irish tourism.’’