Burke rejects criticism over Vat cut failure

Numerous representative bodies in the hospitality sector had been lobbying hard for the measure to be included in the budget

Enterprise Minister Peter Burke said not a single minister gets everything they ask for during budget negotiations. 

Enterprise Minister Peter Burke has pushed back against criticism from the hospitality sector after the decision was made not to reintroduce the reduced 9% Vat rate for businesses in Tuesday’s budget.

In the lead-up to the budget, it was reported that Mr Burke was pushing hard in negotiations for the lower Vat rate to be brought back after it was allowed to lapse in September last year.

Numerous representative bodies in the hospitality sector have been lobbying hard in recent months for the measure to be included in the budget but Finance Minister Jack Chambers was always sceptical about its inclusion saying there was only limited space for tax measures. 

Speaking to reporters, Mr Burke said every minister who goes through the budgetary process has a number of asks and “not one single minister will get everything they ask for”, adding that he rejects the charge that he failed the sector.

However, he defended what he was able to get out of negotiations which included a €170m Energy Subsidy Scheme which he said will provide businesses in hospitality and retail a cash payment of €4,000 before the end of this year.

“Considering the margins they operate at, it will be a big asset to them,” he said.

In addition to this scheme, Mr Burke said other measures such as the 9% vat rate on gas and electricity, the lifting of the ceiling in relation to the small benefit exemption to €1,500, as well as extensions to various incentives and reliefs, will help SMEs going forward.

Mr Burke said businesses in the hospitality sector should be encouraged to draw down more grants available to them to improve energy efficiency.

He said that these hospitality associations should be “making their members aware of how you develop your business”.

“Making them aware of all the supports that are there. We are offering very significant capital support for that sector.” 

Mr Burke added that through the tax changes and cost of living adjustments in the budget, people will have more discretionary income to help support these businesses.

'Devastating blow'

Following the release of the budget, the hospitality sector said the failure to reintroduce the 9% rate was a “devastating blow” for the sector.

The Restaurants Association of Ireland, Irish Hotel’s Federations, the Vintners’ Association of Ireland, and the Licensed Vintners Association expressed disappointment and frustration, warning that newly announced measures fall short of what was needed to protect the industry.

When asked about the decision not to include the 9% rate in the budget, Mr Chambers said there was “limited scope” to do anything beyond income tax changes with the €1.4bn tax package announced during the summer economic statement.

Despite the demand for the lower rate to be brought back, there was limited appetite to do so within the Department of Finance.

The Government’s Tax Strategy Group said reducing the rate to 9% would cost an estimated €764m annually.