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Outline one possible economic effect which an increase in the number of people travelling from the Republic of Ireland to shop in Northern Ireland may have on each of the following: Retailers in the Republic of Ireland: Irish Government’s finances: (16 marks) - Leaving Cert Economics - Question 3 - 2017
Question 3
Outline one possible economic effect which an increase in the number of people travelling from the Republic of Ireland to shop in Northern Ireland may have on each o... show full transcript
Worked Solution & Example Answer:Outline one possible economic effect which an increase in the number of people travelling from the Republic of Ireland to shop in Northern Ireland may have on each of the following: Retailers in the Republic of Ireland: Irish Government’s finances: (16 marks) - Leaving Cert Economics - Question 3 - 2017
Step 1
Retailers in the Republic of Ireland:
Answer
An increase in the number of people traveling from the Republic of Ireland to shop in Northern Ireland may lead to reduced sales and profits for retailers in the Republic. As consumers choose to shop across the border, local businesses may experience a decline in customer footfall, directly impacting their revenue. This decrease can result in some businesses needing to reduce staff or even close down.
Step 2
Irish Government’s finances:
Answer
The Irish government may face a reduction in taxation revenue due to decreased VAT receipts from the sale of goods and services. Additionally, the excise duty income from items such as cigarettes and tobacco could also decline as consumers turn to Northern Ireland for better prices. Consequently, this shift could necessitate a reevaluation of tax policies to bridge the revenue gap.