The Minister for Finance is being urged to either retain the nine per cent VAT rate or introduce a lower rate in support of the hospitality and tourism sectors as well as retaining and creating jobs.
Galway county councillor Eileen Mannion has urged Minister Michael Noonan not to increase the VAT rate as the reduction over the last two years has been a great boost to the tourism industry, has enabled many struggling businesses to survive and has increased employment in that sector.
The reduction of the VAT rate from 13.5 per cent to nine per cent for hospitality and tourism sectors was introduced as part of the Jobs Initiative with a timescale of July 1, 2011, to December 2013.
Cllr Mannion said: “Jobs in the tourism industry are vital for Connemara and recent Government initiatives such as the temporary reduction in VAT and the Gathering have been very successful and have increased tourism numbers and spend in the area. However, it is vital that the industry continues to be supported by the government to ensure jobs are retained.
“I am hopeful that the Minister for Finance, Michael Noonan, will not reinstate the 13.5% VAT rate but will either retain it at nine per cent or introduce a lower increase.”
The call has been supported by the Vintners Federation of Ireland (VFI ) which has also urged Minister Noonan not increase excise. The VFI, which represents 4,200 publicans outside of Dublin and the interests of approximately 40,000 jobs, has recently issued its pre-budget demands calling on the Government to reduce excise on alcohol and maintain the nine per cent VAT rate for the hospitality sector.
Gerry Rafter, president of the VFI said: “Since 2009 over 6,000 jobs have been lost in the industry. We estimate that 2,000 jobs are in jeopardy in the next 12 months. Most of our members are family run business in towns and rural parts of Ireland, often where there is little other employment. These jobs need protecting.
“This Government regularly claims that job creation is the number one goal. Budget 2014 is a great opportunity to practise what they preach. It is clear that a lower excise rate will give publicans some relief and breathing space.”
The VFI is strongly in favour of retaining the current VAT rate as food has become increasingly important to the pub trade and any return to the previous 13.5 VAT rate will make it extremely difficult for members to continue offering food at the current prices.