Lower VAT rate for restaurants but not hotels to be considered in future — minister

A source at the meeting said there was “no appetite” to bring in the splitting of VAT in next month’s budget. Picture: Burak K/Pexels

A lower Vat rate for restaurants but not hotels will be examined in the future, Tourism Minister Catherine Martin has told a meeting with hospitality representatives.

Ms Martin met with the Hospitality and Tourism forum on Wednesday where representatives for publicans, restaurants and hotels were present.

Sources at the meeting said Ms Martin told members of the hospitality sector that the Government would examine decoupling the Vat between food and accommodation in the future.

However, she said it would not form part of Budget 2024 which is due to be announced in less than two weeks but it would be a measure that will be looked at again.

The Vat rate rose from 9% to 13.5% at the beginning of this month but there have been calls for restaurants to maintain the 9% Vat rate. There has been criticism of the high prices being charged for hotel rooms across the country. The decoupling of the Vat rate would see hotels continuing to pay 13.5%.

A source at the meeting said there was “no appetite” to bring in the splitting of Vat in next month’s budget.

Sources at the meeting said Ms Martin told members of the hospitality sector that the Government will examine decoupling the VAT between food and accommodation in the future.

Another source described the meeting as “lip-service” from the minister. 

Ms Martin also poured cold water on the possibility of the expansion of the Temporary Business Energy Support Scheme (TBESS) for some premises who fell short of meeting the threshold to avail of the support towards high energy bills. 

It is understood Ms Martin told the meeting that one-off lump sum payments may be considered to help the sector with continuous high energy costs.

It is also understood representatives for publicans in Dublin spoke of the need to have more gardaí present around Dublin city following a spate of attacks on tourists.

It comes as Public Expenditure Minister Paschal Donohoe said a €1bn overspend at the Department of Health is putting budget allocations for other departments at risk.

Cabinet has been told the amount of money available to fund new measures as part of next month's budget will be "tight". Ministers were yesterday told inflationary pressures mean a significant amount of funding will have to be provided to departments just to stand still.