Restaurant industry joins calls on 9% Vat retention

Restaurant industry joins calls on 9% Vat retention

Pádraig Hoare

A body representing restaurants has joined the hotel and tourism industry in calling for Vat to be retained at 9% in the Budget, saying it is necessary as the “most immediate threat of Brexit” lurks in the shadows.

In its pre-budget submission, the Restaurants Association of Ireland (RAI) said the severity of the threat of Brexit and a hiking of Vat could cost jobs, adding that the reduced rate must remain until 2022. “Brexit is the hospitality industry’s most immediate threat in 2018 and that danger will follow into 2019. We must retain measures such as the 9% VAT rate to allow businesses remain competitive while we continue to measure the potential damage that Brexit could introduce to the industry,” chief executive Adrian Cummins said.

Adrian Cummins: Restaurant rely on 9% Vat rate for their survival
Adrian Cummins: Restaurant rely on 9% Vat rate for their survival

The Irish restaurant industry employs 171,700 people and contributes €2bn to the Irish economy each year, the RAI said.

“Restaurateurs are entrepreneurs — the Government needs to be reminded of that.

“When a restaurant opens or expands, they will create several jobs and generate business for the area and their suppliers. Restaurants all over Ireland are relying on the Vat to remain at 9% for the survival of their business,” Mr Cummins said.

The body said that restaurants in the border counties are particularly vulnerable to sterling weakness and that the restaurant sector in rural areas will be particularly hit by a hard Brexit.

According to Department of Finance figures, estimates show that restoring the 13.5% rate for all businesses favoured by the lower rate since 2011 would result in an additional €527m in revenues to the State. Reducing the 13.5% Vat rate, to 9%, was originally envisaged as temporary to bolster industries ravaged by the recession.

It has cost the State €2.7bn since its introduction, according to the department assessment.

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