Cut hair and VAT?

Thousands of people around Ireland could be left without their local hairdresser unless Government acts quickly to reduce VAT on the sector.

That was the hair raising opinion of the Irish Hairdressers’ Federation (IHF) which released a new report on Sunday called ‘A Final Cut?’.

The report, by Octavian Economics, incorporates findings from the Federation’s latest member survey and calls for a reduction in VAT for hairdressers from 9% to 5% next month when Government will reduce the rate of VAT on newspapers to zero.

IHF said the hairdressing industry employs 5 times more staff than the newspaper industry and was much harder hit in the lockdown, according to Federation President Danielle Kennedy.

She said: “Unlike newspapers and many other businesses, we could not offer our services online.”

The report said the industry is essential for bringing back footfall and custom for other retailers in smaller towns and villages.

“Our industry rewarded the Government for its last cut in VAT in 2011 by boosting employment by 25 per cent in the following five years and we are just as vital now in helping the Government’s town and village centre recovery agenda. With demand falling faster than in 2011 and business costs far higher, VAT must fall accordingly,” Ms Kennedy said.

In a survey of almost three hundred respondents, two thirds of Federation members cited VAT as their main concern and called for immediate Government action. Three quarters of respondents reported that demand had either fallen or remained the same in the past six months.

Ms Kennedy said: “These findings come before the full impact of inflation and interest rates have fully impacted on the economy and consumer demand. They understate the crisis in our industry. If action isn’t taken, many small towns and villages could be left without a service that is not just economically important, but also a vital social connector – particularly for the elderly.”

She continued: “We represent the taxpaying majority in our industry who have delivered jobs growth, who run businesses vital to the economic life of small towns and who are vital providers of flexible job options for women.

“We are not looking for zero VAT but only a modest cut from 9% to 5%, enough to keep our members from closing their doors for good,” concluded Ms Kennedy.