The looming VAT increase from 9% to 13% next September announced in Tuesday’s Budget is a “live issue” for the hospitality sector with a number of bodies emphasizing the significant rate increase will be a topic for discussion with Government over the next ten and a half months.
General Manager of The Kingsley and Chair of the Cork branch of the Irish Hotels Federation Fergal Harte said there was no doubt the rising rate was a “cause for concern” for the industry and said it would be something that would be discussed in the coming months with Government.
“I cautiously welcome the measures and supports announced in the Budget 2022, but we are very disappointed that it didn’t include a 9% VAT rate commitment to 2025.
Mr Harte said the commitment of a steady rate until 2025 would have brought more certainty to the industry that is battling tough times.
Referencing €39m for enhanced tourism marketing to entice the International market back to Cork, Mr Harte said anything that helps to promote the industry was a very good thing.
“The International market is hugely important and it is a very big concern to the industry to make sure it returns next summer.”
Mentioning the Pilot Basic Income Guarantee Scheme for Artists and €25 million for Live Entertainment supports, the IHF chair said anything the benefits the wider sector is very positive.
“Its important to support those parts of the wider sector, it all helps, anything that can help bring back semblances of normality is welcome.”
Looking ahead to the tapering of the EWSS and the reintroduction of the Commercial rates from January, which is usually the quietest month for the hospitality sector, Mr Harte said it was worrying.
The “state of the Hospitality sector” was recognised by the Government in Tuesday’s Budget, according to Cork city cafe owner Richard Jacob.
Owner of Idaho Cafe on Caroline Street, Mr Jacob said he was “delighted” that the Minister for Finance Paschal Donohoe realised the damage that had been done by shutting down the sector for a prolonged period of time and said he was happy to see the VAT level kept at 9% until September 2022.
Despite this positive outlook, the cafe owner said he was concerned that the rate is to be increased in ten and a half months to 13% and said this could prove detrimental to businesses.
Mr Jacob said the Government needed to be careful and highlighted the influx of bills heading for hospitality businesses.
Mr Jacob emphasized he had no problem paying full rates when he was able to make a full income, but he said when his operations were hampered by health guidelines and restrictions, he was less inclined to be charged full whack.
“Overall I am upbeat and positive that things are going to be getting back to normal, that we will reopen everything and it will be hunky-dory. I want things to go back to the way they were and trade without supports, but restrictions changed the way we did business and we should be back paying top dollar too soon.”
“A mixed bag” is how Cork City chairperson of the Vintners Federation of Ireland (VFI) has described the Budget details released on Tuesday.
Michael O’Donovan, who owns and runs The Castle Inn on South Main Street, said the VAT Rate which is to rise from 9% to 13% in ten and a half months (September 2022) was “detrimental to inbound tourism, hospitality and jobs.”
While Mr O’Donovan welcomed the extension of the Employment Wage Subsidy Scheme (EWSS) until April 2022 and the Commercial Rates waived until the end of the year, the VFI representative said the VAT rate would be a topic for discussion with the Government ahead of the implementation of the increase.
“We will be lobbying the Government on the VAT rate. It affects our competitiveness for inbound tourism. When people are looking at coming here they are looking at the cost of things and the increased prices will have an effect.”
Mr O’Donovan said the extension of the EWSS will “get the sector through the winter” and keep them afloat through the “harsh months” of January, February and March.
In terms of staff recruitment, which is a topical issue as many establishments across the sector are experiencing difficulty obtaining the staff they need, the Cork publican said he had not seen anything in the Budget that would alleviate any of the difficulties in this aspect.