One of the largest representative organisations for the hospitality industry has slammed the move back to a 13% tourism and hospitality VAT rate as “nonsensical”.
The Restaurants Association of Ireland said the move by the Government to increase the 9% VAT rate to 13% – as of midnight tonight – will close the doors on many low margin restaurants, cafés and food-led pubs across the country.
The move will add to consumer inflation at a time when Government announced it wouldn’t add to the cost of living, the Association said, and it will move Ireland to the second highest hospitality VAT rate within the EU and it will “erode Ireland’s competitiveness as a tourist destination.”
Restaurants Association of Ireland CEO, Adrian Cummins, said: “The increase is wrong at a time when the country needs to reduce inflation; a VAT increase only adds to inflation. Government needs to restore the 9% VAT for food-related hospitality businesses in Budget 2024 and we will me making the case for this when we meet with the Minister for Finance next week. The increase the VAT rate is the final nail in the coffin for many small cafés, restaurants and food-led pubs.”
Tourism lobby group, the Irish Tourism Industry Confederation (ITIC) said, last month, as part of its pre-Budget submission, that the sector is facing a “cliff edge” with the removal of the 9% VAT rate.
“ITIC has argued consistently that this will negatively affect the sector, be inflationary and damage regional Ireland in particular. A Vat increase will also clearly damage competitiveness giving Ireland one of the highest rates across the EU,” ITIC said.
“A Vat increase would also be unpopular with the public. Findings from a Red C survey of over 1,000 people in late June show that 60% of respondents are against the idea of an increase in the 9% Vat rate for restaurants, pubs and tourism accommodation providers. Only 25% of respondents were in favour of the Vat increase with the balance expressing no opinion,” it said.
