SIMI urge Government to hold off on VAT increase

The Society of the Irish Motor Industry (SIMI) has urged the Government to delay the proposed VAT hike until after the first quarter of next year, when over half of all new cars for the year are sold.

Alan Nolan, SIMI's Director General (pictured) says they 'understand that the Exchequer needs to recoup lost revenue but increasing the VAT, during the busiest retail period is unlikely to achieve this; it is more likely to have the opposite impact'.

"If the VAT increase is deferred until after the peak selling period, it will give the Industry some chance of stability next year. Because of the extreme seasonal nature of our Industry, if sales are bad in January, sales are bad for the entire year, and if the VAT increase is introduced in January, we will no doubt see a fall in sales for the whole year, which will have a serious impact on jobs.

"If the VAT increase was delayed until after the first quarter, it has the potential to deliver a real increase in retail activity not just in the Motor Industry, but across all retail sectors which would boost both tax revenues and employment."

Figures from the SIMI show there were half the number of new cars sold in November than the same month last year. They also show a 49 per cent decrease for the month of November with figures for the year on par with last year.

Sales have dropped since the ending of Scrappage, with each of the last three months down 50 per cent on last year and the industry fears that this will get worse next year if the proposed 2 per cent VAT increase is brought in at the start of 2012.