Decision on VAT rate for hospitality expected next week
Taoiseach Leo Varadkar said there will be further meetings this week in relation to the hospitality VAT rate, involving the key ministers of finance, public expenditure, social protection and the party leaders.
The 9% VAT rate for the industry is due to expire at the end of the month, when it will revert to 13.5%.
Mr Varadkar said he would anticipate being a position to make decisions at next week’s Cabinet meeting.
“Anything we do does require finance bills that have to be done quite quickly next week,” he said.
Speaking on his way into the cabinet meeting he said “people won’t see a cliff edge in terms of the financial supports being removed because the cost of living remains very high”.
He continued ” the things that we’ve done to help with the cost of living cant be repeated forever. But we don’t want them to end suddenly either, so we’re looking at how best to begin to phase them out”.
He said there was nothing specifically on the cabinet agenda today around the cost of living but said the government will be working on that over the course of the next week.
Sinn Féin Spokesperson on Finance Pearse Doherty said the party would support the end of the 9% VAT rate if jobs will be protected.
“This is a temporary measure and we want to see the economic assessment published by the Department of Finance.
“We want to ensure that the increase will not impact on the jobs that we have in the sector or the viability of the sector,” he said.
Speaking on RTÉ’s Morning Ireland programme, Mr Doherty said the rate was a temporary measure.
“There’s many businesses right across the sector that are facing serious pressure in the tourism and hospitality sector and most of those pressures are coming from rising energy costs.
“We know that the 9% rate was introduced at a time of Covid when there was restrictions in place, when people couldn’t frequent these type of venues and it was temporary.
“So we’re not satisfied that we’ve seen the evidence that it needs to retain there permanently,” he said.
Hospitality owners, restaurateurs, publicans and hoteliers want the Government to retain the 9% VAT rate for their industry.
A meeting was held last night with the Minister for Finance Michael McGrath and Minister for Public Expenditure and Reform Paschal Donohoe to discuss the matter.
President of the Irish Hotels Federation Denyse Campbell said the 13.5% rate is the third highest VAT rate in Europe and it is important that the 9% is retained.
Ms Campbell, who is also general manager at the Maldron Hotel at Dublin Airport, said “we expressed our concerns that the Government is considering increasing the VAT rate for tourism and hospitality.
“And increasing taxes on consumers is the last thing that the country needs given that the added inflationary impact will have on domestic tourism and also on our attractiveness to our overseas markets. And the proposed 13.5% VAT rate would mean that we are the third highest VAT rate against our European competitors.”
Speaking on RTÉ’s Morning Ireland, she said the 9% VAT rate brought Ireland in line with other European markets.
“In order for us to stay attractive to our overseas markets, it does need to be at 9% for the entire industry.”
She said that 9% is the correct rate for the industry and to stay in line with international competitors.
In relation to very high prices being charged last summer, she said that was “not reflective of the value that’s available to the Irish consumer and the international visitor” and prices in Dublin particular rose by 18% over a three-year period
She said she hopes that the minister is listening to the industry’s plea to retain the 9% VAT rate in order to prioritise tourism.
Ireland would lose its competitive advantage, she said, if the rate returns to 13.5%.
“Tourism is the largest industry in all of Ireland and 70% of the employment is outside of Dublin, so really it it’s imperative that we keep the VAT rate at 9%.”
She said that members are “dealing with crippling costs”, with energy bills in some cases increased by up to 300% in the last 12 months and food prices up to nearly 20 to 28% in some situations.
“So that’s why we would be pleading with Government not to increase that VAT percent from 9%. It’s €400m at a time when the consumer does not need additional taxes.”
In relation to hotels housing refugees, she said “hotels have really played their part with the Government in accommodating people that are fleeing from their countries and some businesses now will return to tourism and then other businesses may continue to house them”.