Vat hike will cripple hospitality sector

There appears to be a lack of joined-up thinking by the Government — or at least an element of contradiction — when it comes to taxing the hospitality sector.

A modest 9% Vat rate has been in place since 2011 for hotels, restaurants, and other hospitality providers such as cinemas and theatres. It also applies to enterprises such as hairdressing and newspapers.

According to the Department of Finance, this reduced rate costs the exchequer €360m a year but those working in the sector say it has allowed the creation of an extra 9,000 jobs. Despite this, Finance Minister Michael Noonan has indicated he is thinking of reverting to the higher rate of 13.5% for the hospitality industry in next Tuesday’s budget.