Monday 22 October 2018

Case study: ‘VAT and higher utility bills will wipe out gains and cost us jobs’

Concern: Rob Horgan, of Café Velo, is worried about the impact of the VAT increase. Photo: Daragh Mc Sweeney/Provision
Concern: Rob Horgan, of Café Velo, is worried about the impact of the VAT increase. Photo: Daragh Mc Sweeney/Provision
Ralph Riegel

Ralph Riegel

Any gains for small and medium-sized enterprises in Budget 2019 will be swamped by a raft of additional costs across utilities as well as VAT, according to Rob Horgan, who operates Café Velo on George's Quay in Cork with 22 employees.

The café and bistro has proved so successful that it has now developed a partnership with German retail giant Aldi.

But Mr Horgan admitted he was very concerned by the medium to long-term impact of Budget 2019 on businesses like his.

"The hike to 13.5pc VAT is disappointing," he said.

"While we appreciate this was introduced as a temporary measure, the Government has failed to acknowledge the unprecedented success this measure has been.

"As we charge into uncertainty for hospitality and tourism with Brexit looming, a reduction of our competitiveness due to price increases will undoubtedly cost jobs.

"The effect on a €10,000 turnover a week restaurant will be to the order of €23,400 per year with the change in VAT.

"Or, put that another way, it will equate to two weeks of turnover. Or, even more seriously, it will equate to two part-time staff."

"I suppose you have to say it is good news that the Budget was balanced for the first time in a decade and that is good news because it means stability for the economy," he added.

"But, from my point of view, the greatest concern is definitely going to be on the potential collateral damage from cost hikes."

Irish Independent

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