Calls to reinstate 9% VAT fo all food services
A number of hospitality groups have called on the Government to reinstate the 9% VAT rate on food services, which was increased last September to 13.5%.
An industry briefing in Dublin last week called Supporting Irish Hospitality featured the chief executives of the Irish Tourism Industry Confederation (ITIC), Restaurants Association of Ireland (RAI), Vintners Federation of Ireland (VFI), Irish Hotels Federation (IHF) and Licensed Vintners Association (LVA). A number of Cork businesses attended the event.
They releases a statement which which called on the Government “to commit to reinstating the 9% rate of VAT on food-related services. It is essential that last September’s VAT increase be revisited in the upcoming budget given the severe impact it is having on hospitality businesses, many of which are facing enormous financial pressures”.
“These businesses are now at a cross-roads, struggling to deal with very tight margins and reduced profitability due to ever-increasing operating costs. To a large extent, this is being driven by the Government’s own economic policies including a series of employment-related cost increases coming into effect in close succession. The impact of these measures has been particularly acute for hospitality businesses given the labour-intensive nature of our industry,” the statement read.
“Businesses throughout the sector are forecasting worrying cost increases over the next 12 months at levels significantly outpacing inflation within the broader economy. This is on the back of a period of unprecedented cost increases in recent years. Meanwhile, these businesses are struggling to deal with the effects of last September’s VAT increase coupled with the impact of significant pressures on consumer finances – all of which continue to reduce profitability and erode competitiveness. This poses an enormous concern given the implications for the long-term recovery of tourism and hospitality, our largest indigenous employer supporting some 270,000 livelihoods.”
The statement by the coalition of industry groups went on to state that while they have been repeatedly assured by the Government that it understands the extent of the challenges facing hospitality businesses, regrettably this has yet to translate into meaningful supports.
“It is now vital that the Government does everything possible to help put our sector and wider tourism industry on a more stable footing. At a minimum, this must include the reinstatement of the 9% VAT rate for food-related hospitality services.”