Budget 2023: Main points affecting retail sector
From energy supports to 50c increase on cigarettes and zero-VAT rated newspapers, we take a look at how Budget 2023 will affect the retail sector
27 September 2022
Designed to cushion voters against the cost of living crisis, Budget 2023 saw €4.1 billion in one-off measures turbocharge a €6.9 billion ordinary package – alongside €300 million from the Covid reserve fund.
Significant news for retailers included the announcement of the Temporary Business Energy Support Scheme and that cigarettes have gone up by 50c per pack, raising €54 million in taxes.
Independent retailers’ representative group RGDATA welcomed the announcement that there will be a special temporary support system for struggling SMEs dealing with inflation and energy costs rises. The association said it would survey members again to see if the Budget measures are having the right impact.
Meanwhile, newspaper sales will be zero rated for VAT, following a recommendation made by the government-appointed Future of Media Commission in its report, which was published in July.
The measure is not expected to be passed on to consumers in the form of lower cover prices or subscription charges.
In its pre-budget submission, Newsbrands Ireland had called VAT on newspapers as a “tax on information, learning and democracy”. The existing 9% rate on print newspapers and digital subscriptions is one of the highest in Europe, with 22 European states having lower or zero rates.
The Budget’s once-off and permanent or longer-lasting measures which affect the retail sector are outlined below:
- Excise reductions on petrol (21 cent per litre), diesel (16 cent) and marked gas oil (5.4 cent), and the VAT rate on electricity and gas have been extended until the end of February. This will cost €163 million.
- The Temporary Business Energy Support Scheme will pay up to €10,000 a month to businesses to cover up to 40% of the increase in their bills. It will compare the average unit price for electricity between 2022 and 2021. If it is more than 50%, the threshold will be passed. It will need approval from the EU commission.
- A lump sum of €400 will be paid to fuel allowance recipients before Christmas, costing €149 million.
- Income tax package of €1.1 billion. The standard rate cut-off point has been put to €40,000. Tax credits for personal employee and earned income credit will increase by €75. The home carer tax credit will increase by €100. These changes will cost €1.2 billion in a full year.
- The second USC rate ceiling will increase by €1,625 to account for the rise in the minimum wage, costing €77 million in a full year.
- As legislated for, the carbon tax will increase by €7.50 per tonne to €48.50 from 12 October. This will increase petrol and diesel costs by 2c per litre. This will, however, be offset by a reduction in the National Oil Reserves Agency levy of 2c per litre — basically cancelling out any impact at the pump. The carbon tax increases will raise €151 million in a full year.
- Employers can give up to €1,000 in a tax-free payment in voucher form to workers, up from €500, costing €2 million.
- From 1 January, the qualifying income threshold for the fuel allowance will increase to €200 from €120 above the relevant rate of the State Pension, and €500 or €1,000 (couples) for the over 70s.
- €337 million in capital funding for energy efficiency.
- 4,800 additional apprenticeship places, 11,000 upskilling and reskilling opportunities and 2,000 skillnet places.
- The 9% VAT rate for hospitality is not being extended, and will end at the end of February.
- Newspaper sales will be zero rated for VAT, as will some period products, defibrillators and nicotine replacement products. The cost of the newspaper VAT measure is €39 million in a full year.
- Cigarettes are going up by 50c, raising €54 million