Ireland should retain the hospitality sector’s reduced VAT rate but only for food-related businesses, according to a restaurant representative group.
Chief Executive of the Restaurants Association of Ireland Adrian Cummins warned that many food-related businesses will cease trading if the reduced rate of 9% is reverted – as planned – to the standard 13.5% next month.
“It’s the right VAT rate for Ireland, 9% VAT,” Mr Cummins told RTÉ’s Drivetime.
“It would keep us in line with our European partners, which is around [an] average of 9% right across Europe.
“If it goes up to 13.5%, it’ll put us to the second highest after Denmark – and Denmark isn’t a huge tourism destination – and Ireland is hugely dependent on tourism,” Mr Cummins said.
With restaurants being “low-margin businesses”, he argued that the reduced rate should only be retained for food-related businesses, and not hotels or the rest of the hospitality sector.
He added that the rising cost of operating a business in Ireland meant that any boost to restaurants’ revenue this summer has been negligible.
“We’re not doing really well [this summer], I think every restaurant owner or business owner involved in hospitality or food-related businesses this summer are saying quite clearly to us – it’s a horrendous summer.”
Mr Cummins highlighted recent poor weather and rising energy and ingredient costs among the reasons why restaurateurs feel their businesses have not flourished this summer.
“We’re facing into a long tough winter now for us when we look at the forecasts for our industry. The horizon isn’t very good for us.”
Mr Cummins said his association is calling on Government to retain the reduced rate for food-related businesses alone because they will have less customers spending money.
“The only winner is going to be the Government who are awash with money in terms of a surplus this Budget, we see no reason why the 9% VAT rate should be increased for restaurants at least.”
He said that politicians that his group have lobbied explained that the “only hope” of the reduced rate staying in place is for food-related businesses.
“There is absolutely no hope, they’ve told us directly, around accommodation.”