Union urges scrapping of low VAT rate on hotels over worker pay row
The VAT tax break for hotels and restaurants should be scrapped because workers are not benefiting from booming tourism, according to trade union Siptu.
VAT was cut from 13.5pc to 9pc for the hospitality sector in 2011 to help boost tourism and employment in the industry.
Siptu is calling on the Government to scrap the initiative on the back of a profitable year for tourism.
A survey by Crowe Horwath indicated that the average annual profit on each hotel room nationwide grew by €1,954 to €9,201.
Siptu division organiser John King said that employers in the sector needed to engage with the Joint Labour Committee (JLC) to ensure workers also benefited.
"When the Government has sought to ensure that workers also benefit from this upturn, through the creation of a Joint Labour Committee for the hotel and restaurant sector, the employers' groups have refused to engage," said Mr King.
"The Government must state clearly that if the Irish Hotel Federation and the Restaurant Association of Ireland continue to subvert Government policy in this area, the preferential VAT rate for the hospitality sector will be ended in the October Budget.
"This situation needs to be tackled now, otherwise the Government's entire strategy on protecting low-paid workers is in real danger of being undermined."
Mr King said more consideration needed to be given to those working in the industry.
"Despite the overwhelming evidence of a significant upturn, employers in the sector represented by the Irish Hotels Federation and the Restaurant Association of Ireland are defying Government policy and refusing to engage in the Joint Labour Committee process which seeks to ensure workers receive a fair day's pay for a fair day's work," he said.
The Restaurants Association of Ireland chief executive Adrian Cummins labelled Siptu's proposal as "outrageous".
He said it was important that the Government continued to maintain the 9pc VAT rate for hotels, restaurants and businesses in the hospitality sector to help sustain growth.
"The scheme has created 35,000 jobs in the tourism and hospitality sector since it started and we will create another 50,000 by 2020 if the scheme stays in place until then," said Mr Cummins.
"In the Midlands and the border regions they have not seen the recovery yet. This would do nothing for struggling businesses around Ireland."
Mr Cummins was also critical of the Joint Labour Committee and said meetings were not constructive.
"The JLCs don't work and they have not worked. The JLCs are anti-business, anti-job creation and why would we engage in that?" he said.