Vat cut ‘drives’ spike in hospitality jobs

The Restaurants Association of Ireland is claiming the creation of 45,260 new jobs in the hospitality and food sector since 2011 is largely due to a reduced Vat rate for the sector.

A report by economist Jim Power, which the association commissioned, looked at direct and indirect jobs created and an estimate of the social welfare savings, as well as the increase in revenue for the exchequer.

Using statistics from the Central Statistics Office, it concluded the number of people directly employed in the accommodation and food services sector was 145,900 in the first quarter of this year which was 31,000 more than in the second quarter of 2011.

The report argued if the “multiplier effect” was applied to the total number of employees, the number of indirect jobs increased by 14,260.

The association said the total contribution to the exchequer through payroll taxes from the sector is €695m.

“The total contribution to the exchequer is €147.6m,” it said. “The reduction in social welfare payments, assuming the extra employment took people off the live register, is estimated at €620m.”

Adrian Cummins, the association’s chief executive, said: “Our report highlights that the introduction of the low Vat rate in July 2011 has been a major driver of local employment growth.

He added: “45,260 new jobs have been created in the food and accommodation sector across the whole country since this initiative has been introduced.

“Our figures show that 31,000 direct jobs and 14,260 indirect jobs have been developed in this sector since July 2011. It is a substantial number of new jobs to result from just one government action. The 9% Vat rate has benefited regions greatly across the country and we would like to see that maintained.”

The association also pointed out that on a national scale, tourism has also increased every year since the new Vat rate was introduced, with overall visits to Ireland rising by almost 30% since July 2011.

“There is further good news for Ireland’s tourism sector regarding Ireland’s Value for Money (VFM) rating as the number of visitors rating Ireland ‘good’ or ‘very good’ VFM has increased from 28% to 58% from 2009 to 2015 and the number of visitors rating Ireland ‘very poor’ or ‘poor’ for VFM has fallen sharply from 40% in 2009 to 8% in 2015,” it said.

Last year, Siptu criticised the failure of Minister for Finance Michael Noonan, in Budget 2016, to end the 9% Vat rate for the hotel and restaurant sector.

It said retention of the Vat break came at a time when the tourism and hospitality sector was experiencing steady growth and increased revenues, but said employers in the hospitality sector were continuing to veto the Joint Labour Committee (JLC) process for agreeing statutory minimum wages and conditions for workers in the sector.

Analysis: 11


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