Varadkar urges shoppers to be VAT watchdogs

CONSUMERS have been urged to use their buying power to ensure VAT cuts lead to lower prices in restaurants, hairdressers, hotels and other recreational services.

As the rate cut from 13.5% to 9% for the tourism and hospitality trades came into effect yesterday, Tourism Minister Leo Varadkar warned that he would reverse the reductions next year if businesses do not pass on the savings to customers.

While he cannot compel them to do so, he said: “There are over three million adult consumers in this state and they have much more power than any Government agency.”

The 9% rate, announced as part of the Government’s Jobs Initiative in May, will be in force until December 2012 and is up for review in the 2013 budget.

The 4.5% reduction affects restaurants, hotels and guesthouses, cinemas, theatres, newspapers, hairdressers and some sports facilities. The cut will take €1 on average off restaurant menu prices.

“This measure has the potential to significantly boost jobs in the tourismindustry,” the minister said. “It’s one of the single most important measures in the Government’s JobsInitiative.”

Welcoming the VAT reduction, the Irish Hairdressing Federation said it would encourage businesses to embrace it “in a positive manner”.

Omniplex cinemas has promised to reduce admission prices in line with the new VAT rates. However, Omniplex operations manager Mark Anderson said the reduction does not apply to food and drink served at cinemas, which has a 21% VAT rate.

Mr Varadkar also said there would have to be “some sort of compromise” between Labour and Fine Gael on reform of wage agreements.

The cabinet is due to discuss changes to the Joint Labour Committees (JLCs) again on Tuesday, with a “divergence of opinion” between both Coalition partners on the issue.

Mr Varadkar said there was “absolute agreement at Cabinet level” that the JLC system has to be reformed “and reformed radically”. But that “the exact detail of that has to be worked out”.

The system covers issues such as Sunday premiums and overtime pay for workers in certain sectors including retail, hospitality and catering.