RAI Warns Government Against Increasing VAT Rate
The Restaurants Association of Ireland (RAI) has urged the Government to retain the 9% VAT rate for the hospitality industry in the wake the Department of Finance yesterday calling for the lower rate the be scrapped.
The RAI has stated that the reduction in the VAT rate to 9% has improved the competitiveness of the accommodation and food services sector since it was introduced, and has also helped ensure the viability of many businesses that have been going through challenging times.
The RAI has asked Minister for Finance & Public Expenditure, Paschal Donohoe, not to return the VAT rate to 13.5%.
Chief Executive of the RAI, Adrian Cummins, said: "Seventeen out of 19 Eurozone countries have a VAT rate of below 10%. A 9% VAT rate in Ireland is not only the correct rate for our country, but it is also in line with the rest of Europe. We need this VAT rate particularly now as Brexit negotiations begin, to remain competitive”.
Both Minister for Transport, Tourism & Sport, Shane Ross, and Minister of State for Transport, Tourism and Sport, Brendan Griffin, have said that 9% VAT should remain.
Cummins continued: "Against this background of intense uncertainty for the Irish economy in general and the Accommodation & Food Services sector in particular, it does not make sense to increase the VAT rate, given the extra vulnerability that has arisen from the Brexit vote. "
The RAI went on to say that while some parts of the sector are now experiencing improved trading conditions in line with the economic recovery, it is not universal and many businesses are still under significant pressure.
As highlighted by the RAI last month, there is a significant shortage of trained workers in the industry, raising the VAT rate will put a further strain on business owners who are already struggling, it added.
The RAI said that since the introduction of VAT at 9% in 2011, 33,600 direct jobs have been created in the industry, with the taxes accruing to the exchequer from this employment totalled €160 million by the end of 2016.