NI 'To Benefit' As Irish VAT Hiked

Tax increases are expected to sweep into an already wintry Irish Republic today as the Dáil Finance Minister announces details of what is expected to be a €1.6bn tax increase and other extra charges in his second budget speech.

However it could lead to more Irish people travelling to Northern Ireland - both to border areas and as far north as Belfast (pictured) - for their festive shopping - bringing a much-needed boost to NI's retail trade.

Minister Michael Noonan will brief the Irish parliament later today after Monday's spending cuts of €1bn were revealed.

It has been anticipated that income tax rates will today be left untouched, but the top rate of VAT will rise from 21% to 23% in a move that the Irish government estimates will bring in €670m euros, but bring more cross-border shopping in its wake.

Yesterday, the Irish government outlined a fresh round of austerity measures, although Enterprise Minister Richard Bruton also sweetened the pill and announced that his Department's budget will be broadly maintained in 2012, with current spending at €366m slightly lower than its 2011 allocation but capital spending at a record high of €514m.

The Government will commit approximately €1bn in enterprise capital supports, he promised.

Some of the provisions in the capital budget for 2012 included a 4% increase in the Enterprise Ireland capital budget, maintenance of the IDA capital budget, maintenance of the County Enterprise Boards’ capital budget, a 10% increase in the number of high potential start-up Irish companies supported and €18m spend on Innovation Fund Ireland to further improve the Irish venture capital industry.

The Minister said: "This Government is determined that, alongside the very painful budgetary decisions we have to make, we must implement our plan for economic recovery and job creation

"That is why, at a time of declining resources, the Enterprise budget is being broadly protected. Of course my Department, like all others, will find savings across its current expenditure, including in administration and pay budgets.

"However crucially, as previously announced, capital spending on job-creating programmes will be increased in 2012. This will mean that my Department and its agencies will be able to continue current levels of spending on job-creation, as well as increasing the scope of some crucial programmes and implementing some new measures," he said.

See: Severe Budget Targets Public Spending

(BMcC/GK)