Business Irish

Thursday 14 December 2017

Fears for restaurant jobs if VAT rate is hiked

Sarah McCabe

Sarah McCabe

THE Restaurants Association of Ireland (RAI) has warned that thousands of jobs could be lost if VAT on the industry is increased back to 13.5pc.

The warning came hours after Finance Minister Michael Noonan hinted that VAT may rise again.

"We are one of the only industries creating employment in every corner of the country, and if the VAT rate is increased, unfortunately jobs will be lost everywhere.

"Restaurants all over Ireland are relying on the VAT to remain at 9pc for the survival of their business," said RAI president Padraic Og Gallagher.

The organisation said its members are already battling against spiralling costs. It claimed that Irish restaurateurs pay the highest wages in Europe and the highest excise duty on wines in Europe, while Irish food costs are 18pc above the European average

Hoteliers have also been campaigning hard for a roll-over of the 9pc rate.

"While the rate reduction has greatly benefited tourism business, it needs to be more than just a short-term measure if we are to achieve sustained growth in visitor numbers.

"This is particularly important for domestic and international tour operators which are a vital component of the hotels sector," said Irish Hotels Federation chief executive Tim Fenn.

Nine out of 10 hoteliers listed the end of the 9pc VAT rate as a concern in an IHF poll released earlier this year.

Yesterday's warning came after Mr Noonan said it is unlikely that he will renew the 9pc VAT rate in the Budget.

"I know that there is a lobbying campaign under way to maintain the temporary reduction in the VAT rate but such a decision would have costs that must be offset by equal revenue- raising measures," Mr Noonan said.

The 9pc rate has been in place since 2011 for hotels, restaurants and other hospitality providers such as cinemas and theatres. It costs the Exchequer about €350m every year but supporters say it has allowed the creation of an extra 9,000 jobs.

TEMPORARY

It was introduced as a temporary measure and is due to return to 13.5pc next year.

Mr Noonan's speech painted a picture of an industry in recovery.

"Recent figures show that visitor numbers from North America, Great Britain and mainland Europe are all growing, as trips to Ireland from January to July this year increased by 6pc compared to the same period last year," he said.

"Employment in accommodation and food services activities was up by 10pc in the year to June."

Irish Independent

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