Retail Excellence has called on the Government to reduce VAT by 3% in Budget 2018 in an effort to protect retailers from the effects of Brexit.

VAT currently stands at 23% and Retail Excellence said that high VAT rates affect consumer confidence and sentiment. 

It said this is further exacerbated by the negative VAT differential between Ireland and the UK.

This has contributed to the further development of online shopping trends which has led to €600,000 of spend every hour being fulfilled by businesses operating outside of the country.

Retail Excellence said the VAT rate needs to be cut in one fell swoop by 3%.

It said it believes incremental reductions would be a piecemeal response given that previous experience has shown small reductions do not tend to have a positive impact on consumer spend.

"With external headwinds like Brexit and the limping on of negotiations between the UK and the EU, Ireland is already left exposed and this will impact the sustainability of economic growth trends," commented Retail Excellence's Lorraine Higgins.

Ms Higgins said that Brexit has already had a negative impact on the retail trade, with the group's last three quarterly trading reports recording successive declines due to sterling's devaluation and a migration to online shopping.

The group is also calling for a general cut in consumption taxes, the reduction in the cost of doing business, increased funding to get retailers online, increased infrastructural investment, more Garda resources and increased town renewal funding in its Budget submission. 

Irish retailers operate 45,000 businesses with 282,000 employees directly employed in the industry, while the associated employment multiplier effect increases that figure exponentially. 

Retail activity contributes €5.7 billion to the Exchequer on an annual basis - €4 billion in VAT and €1.7 billion in PAYE. 

"The significance of retail must not be underestimated," Ms Higgins cautioned.