Hairdressers have become the latest group to appeal to the Government to retain the 9% VAT rate, which is due to expire at the end of February.
But the sector has gone a step further, by appealing for the rate to be cut further to 5% in order to preserve jobs.
”A failure to support our industry at this critical time will push many salons to close for good, putting thousands of people at risk of unemployment and depriving elderly and rural communities of one of the few remaining hubs for community engagement,” said the Irish Hairdressers Federation president, Danielle Kennedy.
“The hair industry is not just a major contributor to local economies around Ireland, it helps keep countless main streets alive and is a huge part of local communities.”
A report prepared on behalf of the organisation by Octavian Economics claims the economy faces the same challenges as it did 12 years ago when VAT was originally cut to boost tourism, hospitality and personal care providers, such as hairdressers.
The research finds salons are afraid that additional increases in prices would be detrimental to their business.
It would also drive customers into the shadow economy.
The report also refers to a 2018 study by the Department of Finance which found that the original VAT cut in 2011 boosted the numbers employed in the sector by a quarter.
It also points to the footfall in town and cities that is generated by salons, which lead to vibrancy in local economies.
The 13.5% VAT rate was cut in 2020 to help stimulate demand in the tourism and hospitality sectors during the pandemic.
The Government announced in the budget that it would not be further extending it, meaning that unless there is a change in stance before then it will return to 13.5% at the end of next month.
Tourism providers, pubs and other beneficiaries have upped the pressure on the Government in recent weeks to retain the lower rate.
The Irish Tourism Industry Confederation estimates up to 24,000 jobs could be put at risk if the rate is raised again.
Minister for Tourism, Catherine Martin, has indicated that she favours a further extension of the low rate to assist the sectors to recover from the cost of living crisis and pandemic.
However, other members of the Government have remained on the fence, arguing that while the sectors may need further assistance, continuing the lower rate would also mean spending in others areas would have to be foregone.