Appeal to retain 9% hospitality VAT rate

Appeal to retain 9% hospitality VAT rate

Pleading for the retention of the ‘progressive’ tax, Richard Jacob of the Idaho Cafe on Caroline Street says you can’t equate businesses such as his with big Dublin hotels. Picture: Jim Coughlan

“YOU can’t compare a reasonably priced cafe down the country to a five-star hotel in Dublin who can put their prices up 40% for a U2 concert — but we are getting tarred by the same brush.”

That’s the view of Richard Jacob of Idaho Café in Cork city centre, who has come out swinging in defence of the 9% hospitality VAT rate, following reports that it is set to rise in next week’s budget.

He is one of many in Cork’s hospitality trade warning that any change to the preferential VAT rate the industry has enjoyed in recent years will affect jobs and businesses. Sources have suggested a rise to around 11%.

Mr Jacob said the rate has been a huge success since its introduction in 2011.

“It was one of the first times we saw a really progressive tax in Ireland,” he said. “They reduced the VAT and instantly we saw value eating out. Everywhere passed it on and we saw all these early bird deals and other offers.

“With Brexit, there is so much uncertainty and there are so many people in Britain who come to Ireland, especially Cork, and they are all on edge.

“Now is the time to keep our value and competitiveness not a time make our hospitality products more expensive.”

Many have pointed to hotel room prices as proof the industry does not need a special rate but Mr Jacob insists: “I hate to split an industry but there is Dublin and not-Dublin.”

Liam Edwards of Jim Edwards Bar & Restaurant in Kinsale said it was unfortunate to see the reports of an increase as Cork celebrates the announcement of three Michelin-starred restaurants.

“One of the greatest days in Cork food history and then on the other side we have the VAT rate, it brings us back down to earth very quickly,” he said.

Mr Edwards, President of the Restaurants Association of Ireland (RAI), said an increase would add to the already significant cost of doing business. 

“The VAT remaining at 9% was helping keep doors open,” he said. “Here in Kinsale, we have seen restaurants close their doors recently. There is the cost of staff and the bills coming in and I think the VAT was the one thing remaining steady. Increasing it will be a step backwards for our industry, it really will be. I think it will cost jobs and even businesses.”

Aaron Mansworth, general manager of the Trigon Group, said he would also be very disappointed to see an increase.

“One thing we have to be careful of in Ireland is our value-for-money perception, particularly with the change in sterling. There are a lot of markets looking at Ireland now and not seeing the same value.”

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