Hospitality sector urges Government to reinstate reduced VAT rate

Hospitality groups are calling on the Government to reinstate the 9 per cent VAT charge on food services.

Representatives from the sector are calling for a return to the reduced rate introduced during the Covid-19 pandemic, claiming the industry is struggling with the current 13.5 per cent rate.

The Irish Tourism Industry Confederation, Restaurants Association of Ireland, Vintners Federation of Ireland, Irish Hotels Federation, and Licences Vintners Association will meet TDs and Senators on Wednesday ahead of Budget 2025.

In a joint statement released prior to the meeting, the groups said businesses are at a cross-roads, "struggling to deal with very tight margins and reduced profitability due to ever-increasing operating costs".

"To a large extent, this is being driven by the Government’s own economic policies including a series of employment-related cost increases coming into effect in close succession. The impact of these measures has been particularly acute for hospitality businesses given the labour-intensive nature of our industry."

The groups added that business are forecasting "worrying" cost increases over the coming year.

"Meanwhile, these businesses are struggling to deal with the effects of last September’s VAT increase coupled with the impact of significant pressures on consumer finances – all of which continue to reduce profitability and erode competitiveness."

The statement added: "While we have been repeatedly assured by the Government that it understands the extent of the challenges facing hospitality businesses, regrettably this has yet to translate into meaningful supports.

"It is now vital that the Government does everything possible to help put our sector and wider tourism industry on a more stable footing.

"At a minimum, this must include the reinstatement of the 9per cent VAT rate for food-related hospitality services."