Reports that the reintroduction of the 9% VAT rate for the food sector may be delayed are deeply concerning. The figure of €867.7 million to the Exchequer being cited covers a wide array of businesses, but it is food businesses that needs the most support – a cost closer to €560 million.
Dave O’Brien, President of Cork Business Association said, “In particular, our cafés, bars, and restaurants, are already under enormous pressure. Rising input costs, staff shortages, upcoming commercial rates hikes, and ongoing rate reviews are hitting these small businesses hard – many of which are the backbone of our towns and cities. The country is still seeing between 30 to 40 restaurant closures every month. Without immediate support, more will follow.”
A delay in reducing VAT would only accelerate this trend. According to Sean McCarthy, Owner of Tequila Jacks and Paddy The Farmers in Cork city,
“The non reduction of the reduced vat rate for pubs serving food will be another nail in the coffin for people in the hospitality industry. On average, 114 pubs are closing nationwide year on year and the numbers of pubs left open have dropped by 24% since 2005. We urge the government to re-consider their current position on the vat issue.”
Dave O Brien continued, “Our tourism sector depends on a vibrant and thriving hospitality offering – it’s part of what makes Ireland so attractive to international visitors. However, due to global economic trends and current monetary policy in the US, we are already seeing a slowdown in American tourists – a key market for Ireland.
“A lot will depend on what trade deal the US and the EU agree to. Should this be positive we see no reason for a delay in lowering the VAT rate to 9% particularly for the food sector here. Due to global economic policies we are seeing a slow down on tourists from the US coming to Ireland and this will further effect the hospitality sector. Our tourism relies heavily on hospitality and these businesses need to survive to ensure Ireland remains attractive in enticing tourists here.
“We are urging Government to act now. The time to support our SMEs is not later this year – it is now. A targeted VAT reduction for the food sector would help preserve jobs, sustain local economies, and ensure our cities and towns remain welcoming and alive with hospitality.”
According to Ger Kiely from Old Oak in Cork, one of the city’s largest pub and Music venues, “The Government needs to look closely at the entire hospitality sector from pubs to restaurants, cafés and live music venues while there is still something left to preserve and nurture. It’s not just the tax burden – its all the other costs and regulatory imposition on small businesses”