Vat cut for hospitality sector unlikely to be passed onto consumers 

Simon Harris also defended the Vat cut applying to multinational franchises

Tánaiste and minister for finance Simon Harris with minister of state at the Department of Further and Higher Education Marian Harkin, minister of state for trade Niamh Smyth, and Restaurants Association of Ireland CEO Adrian Cummins eating food at Pacino's Restaurant, Suffolk St, Dublin aPicture: Leah Farrell/RollingNews.ie

The Government has said it does not expect a Vat cut being introduced for the hospitality sector to be passed onto consumers.

From Tuesday the Vat rate applied to hospitality and hairdressers will reduce from 13.5% to 9%.

At Pacino’s Restaurant in Dublin on Tuesday, Tánaiste and finance minister Simon Harris was asked if consumers would see lower prices.

“The primary purpose of this measure is to reduce the cost for business,” he said.

“We recognise that there are thousands upon thousands, like tens of thousands, of businesses in the hospitality, the tourism, and the hairdressing sector.

“We recognise that they're often busier than ever. But if you ask them, they'll tell you they're busier than ever and still to the pin of their collar.”

Peter Burke, the enterprise minister, said an “affordability measure and viability measure do not go hand in hand”.

“This is a viability measure to really shore up business,” he argued.

“Businesses have been experiencing extraordinary costs. We know that the hospitality and food service sector have had serious pressure on their margins.

“But what it does do is it brings more business, brings more competition, and through competition, that gives us a better value proposition on price. I think we're operating the right model to deliver a better price.”

Mr Harris also defended the Vat cut applying to multinational franchises, including places such as McDonald's.

He said these franchises are owned and run by local people and are “overwhelmingly Irish-owned small and medium businesses”.

When it was put to Mr Harris that PWC and Deloitte had published figures suggesting that insolvencies in the hospitality sector were down so far this year, the Tánaiste argued that “insolvency is an extraordinarily low bar for success in an Irish economy”.

The Restaurants Association of Ireland said the reintroduction of the 9% VAT rate for would “help protect indigenous businesses, sustain employment, and strengthen communities across Ireland”.

• Louise Burne is Political Correspondent.