VFI: ‘This Budget will lead to closures’
By Finnian Cox
Budget 2025 has led to criticism from several organisations in the hospitality sector over the decision not to lower the VAT rate.
Despite months of campaigning from the sector, the VAT rate was not dropped to 9% and instead still sits at 13.5%.
The rate was brought up to 13.5% last August after being reduced to 9% during the pandemic at a cost of €1.2 billion to the exchequer.
The decision has been met with backlash from both the hotel and pub sectors, with the Vintners Federation of Ireland (VFI) describing their sector as being “on the brink”.
Instead of lowering the VAT, the Government instead proposed a series of support schemes for pub owners, a move which VFI described as irrelevant to the core issue facing publicans.
CEO of VFI, Pat Crotty described the budget as a disaster for the sector, saying that the Government “have failed to deliver any meaningful support”.
“Every minister and TD fully understand that this Budget will lead to closures for a huge number of businesses across the county,” said Mr Crotty.
He said the VAT needs to be reduced for pubs to stay open, as well as the excise duty on the sale of alcohol, claiming the decision will cause a number of pubs across the country to close.
VFI said grants are not the answer to the issue, as one-off payments act as a temporary solution where more sustainable supports are needed.
Minister Pascal Donohoe rejected calls for the VAT to be lowered last month, however talks regarding the issue the day before the Budget announcemnt led many to believe it was on the table.
As well as VFI’s complaints, the Irish Hotels Federation (IHF) have also voiced their concerns.
President Michael Manger of Cork’s Vienna Woods, called the measure “half baked”, saying the measures introduced fall short of what was needed to tackle the issues faced by the industry.
“The decision not to reduce the hospitality VAT rate is short-sighted and extremely concerning given the stark commercial environment that food service businesses are operating under throughout the country,” said Mr Magner.
“The half-baked measures announced will have almost no impact for businesses that are struggling with ever-increasing costs, much of which are a direct result of the Government’s own economic policies,” he said.
Mr Magner called for an urgent re-assessment of the Government’s policy approach to the sector, citing the importance of the industry as an employer, with over 280,000 people working in the sector, 70% of which are outside Dublin.