With a planned increase in carbon tax on the cards for Budget 2012, Retail Ireland has said the government will stand to lose out on €110m in tax revenue as shoppers head North for the bargains.
Retail Ireland estimates that the number of people buying fuel in the border towns of Ireland could drop by 30 per cent as people look north for better prices.
They said that by increasing carbon tax and VAT, the Government risked giving consumers a reason to return to shopping in the North for a wider range of products, including alcohol, food and fuel.
"In light of the deteriorating economic situation in Britain, George Osborne announced last Tuesday that he was cancelling the planned 3p fuel duty increase due in January, while the UK's 5p rise planned for August 2012 has been reduced to a 3p per litre increase.
“In the Republic, we’re facing a 5.5c per litre increase when higher carbon taxes and a 2 per cent VAT rise come into effect. This will leave motor fuel costs south of the border higher than those in the north.
“This could lead to a 30 per cent fall in trade in towns south of the border, resulting in a loss of revenue to the State in excess of E110 million," said Retail Ireland chairman Frank Gleeson.
“It is also worth pointing out that carbon tax has not even yet been applied to coal, a glaring anomaly that should surely be addressed rather than further burdening hard pressed motorists.
“The potential for additional revenue for the State from this source is, we believe, self-evident and we are perplexed by the fact that there has been no apparent urgency to rectify this anomaly.”