Business in Northern Ireland suffers as day-trippers crossing the border must pay Value Added Tax on goods they purchase.
As part of a tough budget in 1987, Minister for Finance, Ray MacSharry attempted to halt the cross border shopping trade by insisting day-trippers to Northern Ireland must pay Value Added Tax (VAT) on all goods. This ’48 hour rule’ abolished allowances for those travelling outside the state for less than 48 hours.
The business from cross border shopping, estimated to be worth £340 million a year to the Northern Irish economy, evaporated overnight. On the Saturday prior to Easter in 1986, 4,700 day-trippers visited the province. On the same day in 1987 only 400 shoppers crossed the border.
Newry has become a ghost town as southern shoppers have deserted the stores while the off-licence trade in the town has experienced an 80% drop.
Frank Woods from Customs and Excise explains how the new rules works. It targets three types of shopper. The first are those who have been outside the state for 48 hours or more. They qualify for their full allowance entitlements. The second are the border zone residents, and they are entitled to set reduced allowances. The third are day-trippers who have not been outside the state for 48 hours and they are entitled to nothing.
If he has any goods that attract a duty he will be assessed for that duty on those goods.
Bread for example is not liable for VAT, however biscuits are subject to duty. All spirits will be assessed for duty, regardless of quantity.
The government decision to impose the 48 hour rule is being contested in the European Court, but it may take two years before European Economic Community (EEC) issues a ruling. Minister McSharry will be making a strong case for Ireland. In the meantime the flow of cross border traffic has gone from a flood to a trickle.
An RTÉ News report broadcast 15 April 1987. The reporter is Kevin McDonald.