Donohoe adamant special Vat rate for hospitality will be reversed

Reduced rate of 9% introduced during pandemic may be hiked to 13.5% in the upcoming budget

Finance Minister Paschal Donohoe said he was 'disappointed' to see some examples of prices going up, especially when major events were happening in Dublin and tourists were experiencing high costs. Picture: Gareth Chaney/Collins

Finance Minister Paschal Donohoe has said the hospitality industry has to play its part in offering the best value for citizens and tourists after it emerged the Government is expected to increase the special 9% Vat rate in the budget.

Mr Donohoe said he was “disappointed” to see some examples of prices going up, especially when major events were happening in Dublin and tourists were experiencing high costs.

He said “we all have to play our part to try offer the best value to those holidaying at home, eating out at home”, and tourists coming to the country.

A reduced 9% Vat rate was introduced to help support the hospitality sector during the pandemic. However, Mr Donohoe is now adamant this emergency measure be reversed and is examining everything up to a full return to the 13.5% rate in the budget.

He said it was a “pity” there was price gouging within the sector.

Mr Donohoe was asked about the Vat increase during an interview with Limerick’s Live 95fm and said he recognised the massive contribution the hospitality sector makes to the economy.

He said he also recognised all that was done during the Covid-19 pandemic to keep businesses viable until they could reopen their doors.

The minister said the Government would absolutely help people in the budget and indicated those who do not qualify for social welfare payments due to earning too much but are struggling, will be supported.

Mr Donohoe also admitted he will be nervous outlining the budget and it would be “odd” if he wasn’t.

On the Government’s pension reform plan, he said PRSI would increase gradually over time to maintain future pensions and to ensure younger workers have the kind of pensions that older citizens have currently.

On the rotation of the Taoiseach’s position in December, which will see Fine Gael leader Leo Varadkar become Taoiseach and Fianna Fáil leader Micheál Martin become Tánaiste, Mr Donohoe said he was confident it would work out.

He said it would be a unique moment in Irish politics, but he believed the Coalition would successfully manage the changes.

He said this was his belief due to strong personal relationships, providing a stable Government during demanding times and he said people wanted the Government to see out its mandate.