RAI urges the Government to retain lower VAT rate

The Restaurants Association of Ireland (RAI ) is urging the Government to retain the 9 per cent VAT rate for the tourism and hospitality industry.

The reduction of the VAT rate from 13.5 per cent to 9 per cent 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 says.

Chief executive of the RAI, Adrian Cummins, said: “Some 17 out of 19 Eurozone countries have a VAT rate of below 10 per cent. A 9 per cent 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.

“Against this background of intense uncertainty for the Irish economy in general, and the accommodation and 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,” Mr Cummins continued. “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. Since the introduction of VAT at 9 per cent in 2011, some 33,600 direct jobs have been created in the industry. The taxes accruing to the Exchequer from this employment totaled €160 million by the end of 2016.”

With Brexit on the horizon, Mr Cummins said it is important to retain the low VAT rate now more than ever.

“Continuing VAT at 9 per cent into 2018 is crucial, not only to the sustainability of restaurants and businesses in the tourism sector, but also to job creation and regrowth for our economy,” he said. “The RAI are adamant that Minister for Finance and Public Expenditure, Paschal Donohoe, must recognise this and make a distinct effort to retain the 9 per cent VAT rate.”

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