VAT restoration set to be key issue for incoming Finance Minister 

Lobby groups moved quickly to set out their demands for Jack Chambers

Jack Chambers has been named new minister for Finance. Photo: Leah Farrell/© RollingNews.ie

The appointment of Jack Chambers as Finance Minister has been welcomed by the business community but hospitality groups have been quick to outline what they want to see from Michael McGrath's successor. 

Representative bodies have praised Mr Chambers for his "proven track record" of supporting the tourism sector, however, the incoming Finance Minister has been urged to review the industry's VAT rate, as well as tackle the cost of doing business and ensure long-term sustainable development for the sector. 

Speaking on Tuesday, Irish Hotels Federation President, Michael Magner said, "Mr Chambers has a pivotal role to play. This will require a decisive response in the upcoming Budget to offset the impact of Government-controlled cost increases and to put our industry on a more stable footing." 

Mr Magner said this should include a review of the "blanket increase in tourism VAT," given its impact on food businesses, adding that there is a "strong and immediate case for the Government to reduce the VAT rate to 9% for food-related services.”

Echoing these demands, the Restaurants Association of Ireland (RAI) said the reinstatement of the 9% VAT rate for food-led businesses in Budget 2025 was the "only measure" that would allow the industry to avoid a further tsunami of closures. 

"The RAI met with Minister Chambers’ predecessor, Michael McGrath, last week who committed to strongly considering reinstating the 9% VAT rate on food as part of Budget 2025," the representative body said.

"The Restaurants Association of Ireland and our CEO, Adrian Cummins look forward to meeting with the new Minister for Finance in the coming weeks and gaining his support for the reinstatement of the 9% VAT rate."

The IFH also noted the "very high" cost of doing business, which it said was particularly acute for the hospitality sector given its labour-intensive nature. 

"In hotels, labour costs are 35-45% of turnover and are continuing to rise as a result of Government-controlled employment-related measures coming into effect in close succession," the IFH said.

"This is at a time when hospitality businesses are forecasting worrying increases in operating costs this year, significantly outpacing inflation within the broader economy."

"As Ireland’s largest indigenous and regional employer, tourism and hospitality plays a vital role within our economy. It is therefore essential that the right conditions are in place to secure the long-term, sustainable development of our industry."