Irish shoppers are expected to rush to shops to buy household products, alcohol, cigarettes and gasoline before the government increase VAT on those items in six weeks' time.

The hike will likely drive people North, warned representatives of shop owners, as the VAT gap between the Republic and the North will widen to 3 percent in the new year, reports the Independent.

The standard rate of VAT is charged on many goods, including: alcohol, beer, wine and spirits; tobacco and cigarettes; petrol and diesel; non-oral medicines and cosmetics; detergents, pet food, paper, toys and bottled water; jewellery; TVs, CDs and computers; fridges, washing machines and furniture; and tools, hardware, lawnmowers, machinery, car parts and accessories.

Frank Gleeson, 'Worst' Retail Ireland's chairman, said the 23 percent tax increase will undermine Ireland's economic recovery.

“The run-up to the busy Christmas trading period is the worst possible time of year to make these announcements,” he said.


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Finance Minister Michael Noonan admitted the increase after Budget details were revealed in the German parliament.

The document outlining the VAT increase was an update on the bailout sent by Ireland's government to the European Commission, which passed it to each of the EU governments. The European Commission admitted to being the source of Ireland's leaked budget information given to the Germans but is blaming the Germans for leaking the document.

Said Ireland's prime minister Enda Kenny: “I now understand that the commission have confirmed that the document in question was circulated by the commission.They've also confirmed that the document was not signed by the Irish Government, that no decisions had been made by the Irish Government, and that stands for itself."

However, Michael Noonan said he would be proposing that the standard rate of VAT should go up from 21 percent to 23 percent.

“Everybody knew there were going to be tax increases in this Budget; choices are limited. I want to increase indirect taxation other than direct taxation, because increases in income taxes cost jobs,” he said.