Fears grow 9 per cent VAT will be scrapped

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Limerick eateries will do battle for top spots at the #FoodOscars next month

 

Fears are growing that the 9 per cent VAT rate for the hospitality sector will be scrapped at the next budget

THE Mid West hospitality industry is echoing calls for a retention of the 9 per cent reduced VAT rate amid fears that the rate will be scrapped in October.

Former Minister for Finance and Limerick TD Michael Noonan introduced the rate to bolster the ailing sector in the 2011 budget

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However, under new reviews, the new Minister for Finance Paschal Donohoe has said that the reduced rate has “done its job” speculating fears it faces the chop during the October 10 announcements.

The news as sparked a reaction from the industry with the Restaurant Association of Ireland (RAI) calling for its retention after it aided create 33,600 direct jobs and 15,456 indirect jobs as a result.

RAI chief executive Adrian Cummins said that competitiveness has improved in the accommodation and food services sector since it was introduced, and has also helped ensure the viability of many businesses that have been going through challenging times.

“17 out of 19 Eurozone countries have a VAT rate of below 10 per cent. A 9 per cent VAT rate in Ireland is not only the correct rate for our country, but it is also in line with the rest of Europe.

“We need this VAT rate particularly now as Brexit negotiations begin, to remain competitive” as Mr Cummins said that it does not make sense to increase the VAT rate, “given the extra vulnerability that has arisen from the Brexit vote”.

However a briefing note prepared for Minister Donohue by his Department indicates that Government officials estimate “that the abolition of the 9 per cent rate and a return to 13.5 per cent for the goods and services in this sector would result in increased revenues of around €500 million.”

The RAI and industry commentators have a differing view suggesting that continuing the 9 per cent rate into 2018 is “crucial, not only to the sustainability of restaurants and businesses in the tourism sector, but also to job creation and regrowth for our economy.