Ireland’s 9% VAT rate for the hospitality industry entered the news again this month as arguments in favour of scrapping the 9 per cent rate circulating around the Department of Finance ahead of the upcoming Budget.
Excel Recruitment work with and on behalf of some of the most well-known and best-loved names in hospitality nationwide and have always been a huge advocate of a 9% rate for the hospitality industry. It is crucial that these companies continue to be supported in their work, providing jobs throughout the country and contributing massively to one of the country’s most important sectors. The rate was one of the few saving graces for hard-pressed hotel and restaurant operators during the recession. Despite being out of the recession, the hospitality industry still faces many challenges including spiralling commercial rates and the uncertainty of Brexit. Add to this the incoming increase in minimum wage in January, which will further increase costs to businesses’ and the growing trend of rising rates in order to retain talent amid a continuing chef crisis. Some parts of the sector are now experiencing improved trading conditions in line with the economic recovery but this is not universal and many businesses are still under significant pressure.
In terms of tourism, the 9% rate is crucial for Ireland to remain a desirable destination and competitive within Europe. Chief Executive of the Restaurants Association of Ireland (RAI), Adrian Cummins, said “Seventeen out of 19 Eurozone countries have a VAT rate of below 10%. A 9% VAT rate in Ireland is not only the correct rate for our country, but it is also in line with the rest of Europe. We need this VAT rate particularly now as Brexit negotiations begin, to remain competitive”.
Minister for Finance Paschal Donohue has signalled the rate will stay (Irish Times, July 2017) but nothing is official until the budget is announced in October. Until then those that work in, for and with the hospitality must be vocal about its importance and its need to stay.
While increasing the VAT rate may provide a short-term injection of cash to the Exchequer, piling additional bills on to already pressured businesses’. It would have serious negative effects on many businesses’ ability to operate and will lead to the loss of jobs and the closure of many quality hospitality operations all over the country. The VAT rate has enabled Ireland’s hospitality industry to do fantastic things- attracting more tourists, grow across the country and employ thousands of people. For all these reasons and so much more, Keeping Vat at 9% is an absolute must.