Maintaining 9% tax rate ‘could create 5,000 jobs in restaurant sector’

The restaurant sector could create an extra 5,000 jobs if the Government keeps the 9% tax rate introduced to help the hospitality sector, a report by Tony Foley of Dublin City University says.

Now, the Restaurants Association of Ireland (RAI) has launched a campaign in an bid to retain the rate.

CEO Adrian Cummins, said the 9% rate has helped the restaurant sector return to a competitive footing.

He said: “When the economy went into decline, restaurants endured falling numbers of diners, rising prices, and great financial uncertainty with many facing closure.

“Money generated by this reduced Vat rate, however, has kickstarted a reversal of fortunes. In the past 18 months, over 10,000 new contracts were issued and this growth will continue with an additional 5,000 jobs to be created over the next year if Vat at 9% remains in effect.”

He said the industry was experiencing a two-speed recovery, with the sector inside the M50 stabilising, but in the rest of the country, a lot of business were failing.

The industry has recorded a decline of between 15% and 20% since 2009.

Mr Cummins said within Dublin, the majority of restaurants that have closed have been replaced, however he said that in smaller towns across the country, where once there were four eateries, there are now only three.

But he said the reduced tax rate has stemmed the closure of many restaurants and maintained jobs. The cost to the exchequer has been €360m of which the restaurant industry accounts for about €80m, he said.

“Vat at 9% has had a positive affect on all aspects of the restaurant sector specifically, but also the wider tourist industry generally. This is why the RAI fervently believes it would be foolhardy to get rid of it. Reducing Vat to this level is a real success story so the RAI is sending a clear message to Government saying keep Vat at 9% — because it’s about supporting food, tourism, and jobs. The retention of Vat at 9% will undoubtedly lead to further job creation in our sector, but also in all the sectors that it supports.”

Tourism Minister Leo Varadkar said the measure so far had outperformed other initiatives, and had increased competitiveness.

Speaking to restaurant owners, he said: “I know that your sector sees retention of the reduced Vat rate as crucial and I also want to see it continued through 2014 and beyond.

“But I need your help to make that case. As you know, the Vat reduction costs the exchequer €350m a year and there are many other demands on that money. To keep it in place, what I need from you is hard evidence that this policy has worked, and is continuing to work.”