VAT rate of 9% must remain to 2022 as Brexit poses immediate threat to hospitality industry

Brexit has been labelled as 'The hospitality industry's Most Immediate Threat' by The Restaurants Association of Ireland (RAI ), which has launched its Pre- Budget Submission 2019 as part of a progressive plan to sustain jobs, maintain competitiveness and deliver certainty for the restaurant and tourism sector.

Commenting on the severity of the threat of Brexit and the need to retain the 9% VAT rate for the hospitality industry, Adrian Cummins, Chief Executive of the Restaurants Association of Ireland stated: “Brexit is the hospitality industry’s most immediate threat in 2018 and that danger will follow into 2019. We must retain measures such as the 9% VAT rate to allow businesses remain competitive while we continue to measure the potential damage that Brexit could introduce to the industry."

The Association is lobbying for the VAT rate of 9% to be retained until 2022, reporting that since the VAT cut, 54,400 jobs were created in tourism and restaurants.

Cummins added: "When the economy went into decline, restaurants endured falling numbers of diners, rising prices and great financial uncertainty, with many having to close their businesses. Money generated by this reduced VAT rate, however, has kick-started a reversal of fortunes. Since the VAT cut, employment in the restaurant and tourism sector increased by approximately 54,400 direct jobs with an additional 25,024 indirect jobs, which gives a total employment increase of 79,424. This growth will continue if VAT at 9% remains in effect."

The Chief Executive of the Restaurants Association of Ireland further maintained that the VAT rate is crucial to the survival of restaurants the length and breadth of the country.

"Restaurateurs are entrepreneurs; the government needs to be reminded of that. When a restaurant opens or expands, they will create several jobs and generate business for the area and their suppliers. Restaurants all over Ireland are relying on the VAT to remain at 9% for the survival of their business.

"The Irish restaurant industry employs 171,700 people and contributes €2 billion to the Irish economy each year.

"With many of Ireland’s European counterparts, it’s the norm to have a VAT rate of 10% or lower. The RAI is calling on the Department of Finance to make decisions about the current Irish tourism VAT rate, not based on what can be recouped in VAT revenue, but in terms of the revenue that can be gained from overseas tourism as a result of a competitive VAT rate. A key figure from Failte Ireland 2017 Tourism Facts for consideration is that there is 23c in every euro going back to the Exchequer in direct tourism related taxes", he said.

The Restaurants Association of Ireland's proactive plan to maintain and grow employment in industry outlines further key points, including:

Counteract the Skills Shortage that Threatens Success of the Industry

Minimise the Dangers of Brexit and Sterling Weakness

Enhanced Access to Work Permits for Hospitality Staff

Reduce the Current Rate of Excise Duty to Encourage Spend in Restaurants

A Reduction in Excessive Insurance Costs

Enhance Competitiveness With Ireland’s National Tourism Policy

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