Responding to today’s Budget 2026 announcement, Cork Business Association (CBA) President Dave O’Brien welcomed the lowering of the VAT rate to 9% for food and catering businesses, and for hairdressing services, and said the Government’s performance will ultimately be judged on one key measure – the number of new homes delivered.
“The reduction in the VAT rate for food and catering businesses, and for hairdressing services from 13.5% down to 9% is very welcome. These businesses are already struggling and facing increased wage and pension auto-enrollment costs from January so hopefully this will save a lot of small businesses from going under,” he said.However, he questioned the delay in introducing the 9% VAT rate, which will not come into effect until July 1, 2026.
On housing, O’Brien welcomed that a number of proposals the CBA outlined to the government have been taken into consideration. CBA hosted an event recently with Government Spokesperson on Housing Seamus McGrath TD where they presented a new paper on Measures to Increase Housing Supply, calling for urgent tax reforms, incentive schemes and a long-term housing strategy, warning that Cork and Ireland’s housing shortage is stifling business growth and making it harder to attract and retain talent.
Commenting O’Brien said,“The focus in this budget was definitely on housing – and rightly so. The jury is out as to whether they have done enough. That said, there are some welcome measures to help bridge the viability gap for developers, particularly around apartment construction,” said Mr O’Brien.
He said one of the headline measures – the VAT rate reduction from 13.5% to 9% on the sale of new apartments – is definitely welcome, although noted it is 0% in the UK.
“This won’t translate to a price drop for buyers, but it should help make apartment building more profitable and therefore more viable. On a €400,000 apartment, that’s a saving of about €18,000. The additional corporation tax deduction could save developers another €6,250 per unit, bringing the total saving to roughly €24,000 per apartment – not insignificant, but still well short of the estimated €144,000 viability gap previously identified by the Government.”
Mr O’Brien also welcomed changes to the Living City Initiative, including the extension of qualifying building dates from pre-1915 to pre-1975 and the increase in tax credits for enterprises from €200,000 to €300,000.
“These changes will make it far more feasible for people and businesses to invest in living and working over the shop. We’ll need to wait for the Finance Act to see exactly how some of these changes play out, especially the definition of ‘enterprise’.”
He also noted that the introduction of a Corporate Tax exemption for Cost Rental Housing Scheme profits could be significant. “This could make cost rental schemes viable for private owners, not just housing bodies – provided they can secure funding. It’s one to watch.”
On the introduction of a new Derelict Property Tax to be administered by the Revenue Commissioners, O’Brien said, “That’s positive news – at least we can expect it to be administered properly, much like the Residential Zoned Land Tax.”
Concluding, O’Brien said: “Overall, this is the first time in years that the Government has meaningfully used taxation as a tool to address the housing crisis. Some of what we asked for has been delivered. Whether it’s enough remains to be seen – but it might just be enough to get things moving.”