BUSINESS owners in Cork have warned that Budget 2023 could be the deciding factor on whether they keep their doors open or not.
Rising costs of energy, the rising costs of materials and food, rates, and an increase in the minimum wage are putting direct pressure on businesses attempting to stay afloat following what has already been a difficult number of years of surviving a pandemic.
Aidan Duke, an owner of Duke’s Coffee on Carey’s Lane and Mahon, said his bills have doubled in the past few months.
“There’s an energy crisis all over the world. Europe is suffering more than most, but there’s an energy crisis everywhere.
Mr Duke said, however, that the retention of the 9% VAT and supports for energy costs are “controllables that the Government can influence and change”.
“Small businesses, in particular, aren’t moaning. Small businesses want fair play, a level playing field where factors that are outside our control can’t be deciding the success or failure of a business.” Meanwhile, Managing Director of Trigon Hotels Aaron Mansworth said that he has also experienced “massive hikes in costs”.
“Energy consumption is down through greening and sustainability initiatives but we’re still looking at energy bills that are upwards of anywhere between 200% and 300%.
“Across the board, we’ve seen hikes on linen, on food, milk, everything has had a price hike. There is nothing that hasn’t had a price hike and it’s a knock-on from the energy, so, many people are trying to deal with the same issue and having to put up pricing,” he said.
Owner of Koto Restaurant in the city centre Jeff Safar Hamidi said that the VAT rate for food in hospitality needs to be permanently set at 9% to be in line with our European counterparts.
“Increasing the VAT rate is only going to fuel inflation and increase the cost of living. Many of us are locally owned, family-run, and owner-operated restaurants, cafés and bars where we purchase from local suppliers and the profits and wages of the company stay and are spent locally.” He said that he has had a 300% increase in electricity since August 2021, during which time he said rice has seen an increase of 56%, soy sauce has increased by 120%, and coconut milk by 56%.
Speaking to The Echo, Cork city and county chairperson of the Vintners’ Federation of Ireland (VFI) and owner of The Castle Inn Michael O’Donovan called for the retention of the 9% VAT rate for businesses which he said would be “a milestone to keep us competitive looking forward to 2023”.
He said it would help to keep Irish publicans competitive against European neighbours and to attract inbound tourism.
Mr O’Donovan also called for a 7.5% reduction in excise duty in 2023 which he said would cost the exchequer roughly €92.5 million.
He said that energy costs will be the biggest factor going forward that could have major implications on businesses.
“We appreciate that it might be difficult for the Government to give direct money to businesses in energy supports but what we’ve asked for is a supports package in place of that and a right-off of rates for Q1 and Q2 of 2023.
“We’re also looking for something around wage subsidies because every business pays rates to the size of your premises, and everybody has people employed so a wage subsidy would give cash directly back into the business to be able to put against the energy costs and the rates would be a way of giving cash back to the business too.”
Mr O’Donovan said it is “inevitable” that there will be closures in the sector if the Government does not give businesses substantive support.
“We did meetings across Cork County and City and one of the biggest things that came out of the meetings was that publicans up to this month have been looking to go seven or six days a week, those that were only operating four or five.
“They wanted to extend their business and now they’ve all paused and the one thing they’ve all been saying is looking toward October and November and with energy increases down the tracks, if those increases do materialise and the burden is put on the business they’ll even be looking at reducing hours further.