Harmonising VAT
MLAs debated a Sinn Fein motion on all island economic regeneration today. It prompted some predictable exchanges with the DUP accusing Sinn Fein of pursuing "fantasy economics". One aspect of the motion which intrigued me as that it talked about harmonising not just corporation tax, which at a headline rate of 12.5% is much lower than the UK equivalent, but also VAT, which is 21% on most goods south of the border. That compares to the standard UK rate of 17.5%.
Of course the deliberations of our Stormont politicians on these topics are entirely academic. But with the new Chancellor George Osborne confirming the date for his emergency budget as June 22nd, many economic commentators are taking it as read that he will increase UK VAT at least to 20%. If this happens what will be the impact on the cross border shopping boom of recent times?
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