Saturday, July 18, 2009

A Region Once Again

Sometimes it's the small things that catch your attention. Like the letter I got yesterday from Sky telling me about 'changes' to my subscription payments - as in, the upward only type of change. It's never nice to be told in these deflationary times that the price you pay is going up, like it or lump it. I guess I'll be rethinking my Sky packages as I'm sure will many of their 580,000 or so subscribers in Ireland (estimates from Comreg, figure 5.1.1).

But that wasn't the thing that struck me. Rather it was a supplementary notification about VAT changes planned for January 2010. The letter explains:
Earlier this year, we reduced our prices following the government's VAT cut. As the government has announced it will increase VAT back to previous rate of 17.5%, from 1st January 2010, your monthly subscriptions ... will increase ... from this date onwards.
My first reaction was one of amazement that I had completely missed a government initiative to help Ireland progress towards the smart economy by cutting vat on digital services. Then I thought how stupid of them to put VAT back up again ... and then I realised I was being stupid: the letter was referring to the British Government of course.

Sky don't separate out their Irish subscription numbers in most of their investor presentations, preferring instead to refer to the UK and Ireland combined when citing revenues, subscription numbers etc. Even in relation to broadband subscribers - but they don't provide a broadband service in Ireland!

Now none of this is to beat up on Sky as such - I've tried competing subscription TV services and I won't be switching away any time soon. And the fact that they're using their Irish sales figures to boost their numbers to potential investors/advertisers in the UK is a common enough practice - Tesco and most UK newspapers with Irish editions do the same thing.

But it is striking that 40% of Irish households will see their cost of living rise next January thanks to a change in the UK Government's tax policy on VAT (and yes, they/I also saw that cost of living fall due to lower Sky subscription package rates in Ireland when the UK Government cut VAT last December).

Still, it makes you wonder - as it does Stephen Kinsella - whether Ireland can be thought of as a country, as an independent economic actor if you will, when we are subject to so many external factors beyond the control of the Irish government? Like VAT on satellite TV subscriptions?

Are we a region once again?

2 comments:

  1. I am not a Sky subscriber, but I very much doubt that your payment is subject to U.K. V.A.T..If it is, my opinion of our own tax-collectors will change, and not for the better.

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  2. Oddly enough they don't separate out the VAT component in their bills Fergus - unlike ESB, Vodafone, Bord Gais etc.

    I imagine this is because they are invoicing consumers in one EU country from another EU country and so are not obliged to do so.

    But I'm 99% certain they are applying the UK VAT rate. Of course, if they applied the Irish VAT rate then I'd have to pay them even more for their service ...

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