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Gerard O'Hare, the Co Down landlord of the Sainsbury's supermarket in Newry said last week's reduction in excise duty on alcohol would have "very little effect" on the phenomenon of shoppers heading north.
In an interview, O'Hare – dubbed Mr Newry – told the Sunday Tribune that the minister for finance Brian Lenihan should be congratulated for starting to tackle excessive costs in the Republic.
But O'Hare claimed the government had been using northern shopping as a smokescreen to distract from its inactivity in tackling costs in the Republic and had hidden the failure of retailers to pass on the benefits of the strong euro to southern shoppers. "At least he [Lenihan] has tried to address the costs. The pricing issue is not just the exchange-rate issue. It is a structural issue in the Republic," said O'Hare, who also owns a shopping centre in Carlow and is developing a retail centre in Waterford city.
Excise duty cuts will fail to stem southern shoppers, said Bill Tosh, chief executive of the Dundalk Chamber of Commerce, because the huge 25% rise in the value of euro against sterling was not being passed onto local southern stores. Tosh said citizens of the Republic were being treated like "suckers" by the 'dual pricing' policy of British distributors and retailers marking up their euro prices.
Minister for finance Lenihan said last week that his cut in excise duties would help stem the flow of shoppers heading north.
But an analysis by the Sunday Tribune shows that the cost to the exchequer of the northern shopping phenomenon is being overstated. The Department of Finance confirmed last week that it lost €90m in Vat and excise duties into northern shopping tills, amounting to a meagre 2.5% of the €3.5bn in retail receipts the exchequer lost last year from the overall slump in consumer confidence.
And Department of Finance budget documents show that cutting the excise duty on alcohol will cost the exchequer €90m next year.
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