The Licensed Vintners Association (LVA), the Vintners Federation of Ireland (VFI) and Drinks Ireland have said that their VAT reduction on on-trade alcohol proposal for pubs, restaurants and hotel bars is of "utmost urgency" following the government's decision to postpone the reopening of pubs and bars until at least August 10.
The three organisations have proposed a temporary reduction in the VAT rate for on-trade alcohol from 23% to 9% until December 31, 2020, as a direct support for pubs, and said that the VAT reduction would contribute directly to overheads for businesses and is intended to benefit the pubs, rather than the consumer.
The organisations added that the proposed VAT rate reduction is not intended as a demand stimulus, but as a business support, and that it would go far to meet the myriad challenges facing the pub sector, allowing pubs to offset some of the costs associated with reduced turnover due to the COVID-19 crisis.
"Money That Will Save Businesses"
LVA CEO Donall O'Keeffe stated, "It is money that will save businesses and jobs in real time.
"While pricing is a matter for each individual business, this VAT reduction on alcohol is intended as a business support for pubs. This targeted support is essential for every pub in the country at a time when 60% will have been closed for five months or more, with no trade, overheads and increased costs to cover. A VAT reduction is the only measure that will provide an immediate difference."
The Need For "Adequate State Redress"
Meanwhile, VFI CEO Padraig Cribben commented, "We understand why this country was locked down in March. Pubs were among the first to do so, and many closed before the government ordered them to. It was the correct thing to do.
"However, it is not realistic to keep such an important domestic sector of the economy closed for five months and then expect it to reopen without adequate state redress."
Drinks Ireland director Patricia Callan added, "A temporary VAT decrease would be universally beneficial. It would help all pubs in one direct measure that is administratively easy to implement. It would allow pubs to recoup some of the money that they have spent investing in the costs of reopening and make it easier for them to repay debt and cover for reduced capacity due to social distancing.
“We believe the postponement has only made our proposed temporary VAT decrease even more pressing, and we urge the government in the strongest possible terms to implement it as part of their July stimulus package - a package that has been hailed as 'a package of scale that can be deployed at speed'. A VAT reduction can be deployed at speed."
© 2020 Hospitality Ireland – your source for the latest industry news. Article by Dave Simpson. Click subscribe to sign up for the Hospitality Ireland print edition.