McGrath won't revisit Vat hospitality rate this year despite pressure on hospitality sector

Finance Minister Michael McGrath. The hospitality Vat rate was returned to its pre-pandemic level of 13.5% in the most recent budget despite heavy lobbying from some industry groups. Picture: Leah Farrell/© RollingNews.ie

Finance Minister Michael McGrath said he will not revisit the contentious Vat rate despite cost pressures facing small hospitality firms, but said he remains focused on providing tax debt warehousing flexibility.

Mr McGrath said “there are no plans for a change to the Vat rate” and that it is “set for 2024”, adding that if he made changes to parts of the most recent budget it would open the floodgates for other sectors to make demands.

“Were we to reopen the budget there would be many, many calls from sectors who would make the case for additional support and funding,” said Mr McGrath.

He added that “different services could legitimately make the case that they deserve more funding” as “trading conditions are very difficult for a lot of businesses at the moment.” 

The hospitality Vat rate was returned to its pre-pandemic level of 13.5% in the most recent budget despite heavy lobbying from some industry groups. The rate was reduced to 9% to give some financial aid to hospitality during that period.

However, many hospitality operators have recently voiced their concern about mounting costs which have forced some to shutter in recent weeks.

However, Mr McGrath reiterated the need “to provide as much flexibility as possible to businesses that have tax debt warehoused” to help struggling businesses in addition to the €250m support package for SMEs announced in the budget.

He added that he had spoken to the chairman of the Revenue Commissioners earlier this week and that a proposal is in an “advanced stage”.

“I would hope in the next week or so we would have that finalised,” he said.

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Mr McGrath made these comments while attending the UCC Commerce Society’s 42nd Commerce Conference in Cork County Hall, an event sponsored by the Irish Examiner.

Mr McGrath was joined at the event by Dell Ireland managing director Catherine Doyle and AIB chief executive Colin Hunt.

Also in attendance was Cullen Allen, co-founder of Cork-based food company Cully and Sully, who comes from the food business and hospitality business in Ballymaloe run by the Allen family.

Mr Allen spoke about the growing mentality in Ireland that companies should scale with the end goal of selling their business. Mr Allen sold his business in 2012 to New York-based organic products group Hain Celestial but added that he would like to see more sustainable supports for family-owned businesses.

“There is amazing help out there,” he said, adding that “it is getting much tougher for small businesses”.