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THE GOVERNMENT HAS announced that a special VAT rate for the hospitality sector is to be extended until early next year.
The special 9% rate for the hospitality sector was introduced in 2020 in a bid to lessen the impact of the Covid-19 pandemic.
It was due to lapse in August this year, but will now be retained for a further six months until 28 February 2023.
The extension will cover the same goods and services as the original measure, including restaurants, cinemas, theatres and museums, at a cost of €250 million.
Finance Minister Paschal Donohoe brought a memo to Cabinet to extend the lower rate.
Speaking following the Cabinet meeting, he said that the tourism and hospitality sector was “unique impacted” by the public health restrictions put in place throughout the pandemic.
“Through no fault of their own, bars, hotels and restaurants had to close on multiple occasions to help the country make its way through the worst of the public health crisis,” he said.
“The Government put in place unprecedented support for the economy, with the wage subsidy scheme supporting the incomes of citizens across the country. The accommodation and food services sector was the most supported by the employment wage subsidy scheme, to ensure that workers maintained the link with their employers and to give businesses the best possible chance to weather the pandemic.”
He said extending the VAT rate will provide further support to the tourism and hospitality sectors over the busy November/December period and into the early New Year.
No further extension to this measure is envisaged, meaning the 13.5% rate will apply to these sectors from 1 March 2023.
Donohoe also said that the end of the wage subsidy scheme on 31 May will be a challenge to some hospitality businesses.
“It is a very considerable change in the support that businesses in our economy have been receiving, but we need to bring the scheme to an end,” he said.
“The Government in December laid out very, very clearly what we would do in relation to the future of the employment wage subsidy scheme. We’ve implemented that. All non-hospitality businesses ceased to participate in the scheme last month, and we now have an important core of our hospitality sector still in the scheme.
In terms of the future, the reason why we have maintained the employment wage subsidy scheme the way we have and the reason why we are making the 9% decision today is to give those businesses every chance of being viable in the years to come.
Ahead of the Cabinet meeting, Green Party leader Eamon Ryan said that the rate changes will be timed to ensure that the hospitality sector is not adversely affected.
He said that “when we go into the dark winter, it’s difficult for hospitality – we don’t want to change it then.
“It’ll be timed in a way that gives the hospitality sector the best chance to get back on its feet. It will be brought back up, but it will be done in a way to make sure it doesn’t adversely hit the industry.”
Minister for Tourism. Culture, Arts Gaeltacht, Sport and Media Catherine Martin said the Hospitality and Tourism Forum has repeatedly raised the importance of extending the lower VAT rate for the entirety of 2022.
“I have pressed on this issue for several months now and I know that this extension will give the sector time to rebuild and consolidate after a harrowing two years under Covid-19. The extension will promote business survival and support employment in the industry,” she said.
Groups representing the sector welcomed the move. Adrian Cummins of the Restaurants Association said “it will help businesses ahead of a difficult tourism season.”
“Our Association will be advocating for a continuation of the 9% vat rate to the end of 2023 at least,” Cummins said.
In response to a parliamentary question last week, minister Donohoe said Revenue informed him that the estimated cost of extending the 9% rate for the entirety of 2023 would be in the region of €500 million.
Groups representing the sector welcomed the move. Adrian Cummins of the Restaurants Association said “it will help businesses ahead of a difficult tourism season”.
“Our Association will be advocating for a continuation of the 9% vat rate to the end of 2023 at least,” Cummins said.
In response to a parliamentary question last week, minister Donohoe said Revenue informed him that the estimated cost of extending the 9% rate for the entirety of 2023 would be in the region of €500 million.
However, it is not believed that the extension will run for that length of time.
Additional reporting from Christina Finn and Jane Moore
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Will the pubs in temple bar still charge above €7 for a pint. Ye better believe they will.
@Paul Gorry: don’t go there if you are so worried about the price, a nation of whiners, you are paying for the area where you choose you are socialising in,
@Larry O Reilly: Never been in temple bar Larry. I like a drink in the suburbs meself. Id be more worried about the the long term effects on the tourism industry sending people to that hell hole. Paying for the area? Get real Larry.
@Paul Gorry: so oif you never been there how do you know so much about the area and price of drink in there strange commenting on something that you don’t actually know about and I’m the one that needs to get real, might need to take a look at yourself first
@Larry O Reilly: It’s been all over the news for years Larry. I mean what do ye not understand?. Again I’ll rearritated my comment. Get real yeah.
@Larry O Reilly: gwan out of that,it’s €7 for a pint of cider in Blanch
@Paul Gorry:
Not just temple bar !
Cheaper to go abroad and get some good weather…
What is that going to do in the long run?? How will keeping the VAT rate down for people who can afford to go out and enjoy themselves help people below the poverty line?? They have taken away the privilege of someone having a beer at home watching a football match on TV.
@Brendan We Are One Ireland.: What are you rambling on about? This is to try encourage people to spend in the hospitality sector to try help businesses from going bust.
@Brendan We Are One Ireland.: that was a privilege??? Wow….
@DK: I reckon his point is about those that can’t afford to help the hospitality sector and paying extortionate money for a can of Dutch gold. Although i could be wrong.
@Brendan We Are One Ireland.: Encouraging people to go out and spend is what keeps hospitality workers employed and hopefully out of the poverty you speak of. If more bars and restaurants end up closing how does that benefit anything? As for having a drink at home it’s not a privilege and anyone who wants to do that still can.
@Paul Gorry: That is his point and he’s right. But alcohol should be made available to licenced hospitality venues at a similar low price. Then we’d all be happy. The drinks industry is the main culprit here… run like a cartel.
@JG: When you are living on just over €200 a week, having a can of beer at home watching a football game is a privilege. With unit pricing that has been taken away from us.
@DK: Have you noticed a decrease on menus in the hospitality sector?? I wouldn’t know as I am living on just over €200 a week.
@Heather Knowles: What was called cheap drink has now doubled in price thanks to the lobbying of the LVA. Who benefits from this? Not hospitals or charities dealing with alcohol abuse, it’s the supermarkets and off licenses. When you had something and it’s taken away from you then you realise it was a privilege.
@Brendan We Are One Ireland.: With all due respect, if you are living on just over €200 a week, the last thing you should be buying is alcohol.. In saying that, there are plenty of beers available in off license and supermarkets for under €2 a bottle or can.
@Dave: Why? If he was able to budget for it, what was wrong with buying a few cans a week. Those cans have now nearly doubled in price hitting guys like him hardest. Meanwhile those who can afford it continue to drink the same amount but at a higher price.
Loads of hotels and restaurants have all increased their prices. Even coffee has gone way up. I know cost of living has gone up but so has profiteering riding on the back od covid.
So as a result prices have gone up, if hospitality don’t get their heads out of the clouds they will implode and close.
The Government are also to blame as a small country that rely on tourism are so over priced it actually is declined I personally will never stay in this country for a break again never. Hotel prices a joke and yet like the Banks Government just keep throwing cash at support for them. Go to France for 3 days and cheaper than a night here Fact.
So these muppets had to go to eu cap in hand to reduce vat on heating oil
yet there is no issue in continuing to subsidising the profits of hotel chains by keeping vat at 9%
This government only works for lobby groups
Hotels, meals out are a rip off. I thought VAT had already increased the prices they are charging
Anyone who knows the basics of economic reality for SMEs in the retail retail sector (which generally carry significant debt) knows that once that rate is put back up; prices will have to be put up. And the public will be up in arms.
@Vonvonic: *excuse me. I meant hospitality sector.
@Vonvonic: prices were already increased on pints when pubs reopened after covid ..
@Ciaran: The cost of everything has increased. Only a complete martyr would go into the pub business at the moment. That’s the reality. Any idividualy owned pub that invests in it’s business to keep up standards, is constantly reorganising debt to keep the doors open. And the VAT rate is factored in to that. What you’ll get in the end is nothing but franchised sh!t holes the way things are going.
@Vonvonic: up 40/50 cent a pint before Christmas. A lot will suffer and close.
The reduced VAT rate of 9% is on eat in food/coffee, Hotel rooms, Hairdressers from what i know. The standard rate of 23% applies to alcohol. Correct me if i am wrong. So if the rate had gone up in Sept your bill would have risen as I am pretty certain it would be passed on by most business’s
Vat drops yet prices spiral upwards. 3 pints and a lemonade. 24 euros in dublin and not temple bar either.
@billy bound: Vat on drinks is 23% not 9%.
Can only be a positive move.
Takes pressure off those who own the business & those who work in it. 280,000 people in the sector, struggling to provide & survive.
Drink up
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