The Department of Finance published the report into the implications of cross border shopping for the Irish Exchequer in respect of VAT and excise. The report was prepared by the Office of the Revenue Commissioners and the Central Statistics Office.
The report begins by examining the causes of the price differentials between the Republic of Ireland and Northern Ireland. The report notes that the major causes of price differentials are
- costs,
- profit margins and
- the rapid depreciation of Sterling against the Euro.
Changes in VAT rates have widened the price differentials but according to the report they remain small compared to the size of the change in the exchange rate.
The estimated value of cross border shopping is noted to be in the range of €350 million to €550 million in 2008. The resulting VAT and excise duty revenue loss to the Irish exchequer is estimated to be between €58 million and €90 million for 2008. However, the report notes that there are significant difficulties associated with quantifying the extent of cross border shopping and estimating the implications for the Irish Exchequer.
The report is available here