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A CROSS-PARTY ROW has started over election proposals to slash the 13.5% VAT rate for restaurant owners which has been at the centre of an ongoing crisis.
The food and hospitality sector has long-called for the 9% VAT rate – which was present during the Covid-19 pandemic – to be reinstated as they claim operating costs for produce, wages and energy bills have risen with inflation in recent years.
A spate of recent restaurant closures – some of which had high-profile owners or were popular with locals – led unions representing small and medium enterprises to protest last month, calling for the VAT rate to be slashed.
Fine Gael today announced its business policy plan which included an intention to slash the VAT rate to 11% for all firms in the food, hospitality, entertainment and hairdressing sector. Hotels would miss out on the reduction.
The promise makes up part of a €800 million support package on offered by the party, which would include a retail crime strategy, SME test schemes and a promise to deliver 300,000 new jobs while attracting more foreign direct investment.
Taoiseach Simon Harris promised that the supports would be felt by businesses within the first 100 days of a Fine Gael government.
Fine Gael’s plan was immediately undercut today by the Social Democrats, proposing that the food and accommodation hospitality sector must be split and that a 9% VAT rate be applied for restaurants.
Leader Holly Cairns said this proposal would make for a more targeted scheme for SMEs, such as small cafés, but added that it would be an emergency measure.
Tánaiste Micheál Martin, who was out canvassing in Douglas, County Cork today, said that while he is in favour of VAT reform, lowering the rate to 11% could inadvertently trigger higher VAT rates on energy, which he said would only drive up costs for Irish householders through higher gas and electricity prices.
However, he said he was not ruling anything out as it will provide a 300 million euro support fund for businesses and a 1.5% reduction in the PRSI for employers who have staff on the minimum wage.
Speaking on RTÉ Radio One’s Saturday with Colm Ó Mongáin programme, Finance minister and Fianna Fáil Dublin West candidate Jack Chambers said that any slash to the VAT rate would increase bills.
Chambers explained a VAT reduction to 11% had been considered during budget negotiations this year but it was found that rates on gas and electricity bills would increase to 11% as a result.
He said his party will be committing to a five-year freeze on VAT rates for bills at 9% for food businesses instead, which he claimed would take a significant burden away from owners. He added that it would be funding within the overall fiscal framework.
Chambers said:
“We could not do that if we implemented the Fine Gael proposal of an 11% rate, because essentially, Fine Gael want to increase the vast rate and gas and electricity in their proposal.”
Sinn Féin TD for Donegal and party spokesperson for finance Pearse Doherty challenged Fianna Fáil’s plan, claiming that Fianna Fáil had legislated in the latest finance bill to increase the rate by 3.5%.
Fine Gael’s plan to increase VAT rates to 11% would also increase rates on to gyms, swimming pools and leisure centres which, in turn, would increase membership costs.
A party spokesperson told The Journal that a €50 tax credit would offset the effect for members. Chambers today that increasing tax on gym membership is “completely regressive” and that Fine Gael’s proposal is a “serious mistake”.
He claimed the tax would impact young people and many people who value their gym membership.
Sinn Féin leader Mary Lou McDonald, speaking to reporters in Waterford, echoed these concerns.
She claimed that the 11% rate would have “an adverse consequence” for those who currently have a 9% rate, such as newspapers, gyms and “bouncy castle hirings – it may be niche, but it matters”.
“This is nonsense, to be honest. I think it’s policy making on the back of an envelope.”
McDonald highlighted that Sinn Féin has proposed that rates be cut to 9% and that it was rejected by government last week.
The Department of Finance has also said that any rate change would be “unjustified” and too expensive to maintain.
Labour Party senator and candidate for Dublin Central Marie Sherlock criticised Fine Gael’s plan, claiming that if the party really wanted to cut the rates to 11% it would’ve done so during at Budget 2025.
“It’s next May, when they’re proposing to bring it in, which is cold comfort to a lot of those small businesses out there,” she said, adding that any plan to reduce the rate would only go onto improve the situation for larger businesses, such as hotel chains.
“We need to actually resolve the problem,” Sherlock added. “A lot of these businesses, operate out of premises that that are energy inefficient. So we need to actually put a retrofitting program and in place.”
Speaking on the same programme, People Before Profit councillor and candidate for Dublin South-Central Hazel De Nortúin said that any plan must focus on cutting employee’s tax rates.
While De Nortúin is supportive of cutting the VAT rate, People Before Profit prefer reducing the rate of USC paid by employees to “put that money straight into the pocket of the employees”.
She said that she had “no problem” with proposals to cut VAT rates for employers, but argued that it needed to be met with an increase in the minimum wage. She added that her party would prefer if rates were cut for SMEs and increased for larger multinationals.
McDonald said that Fine Gael’s proposals were “extraordinary”, claiming that the 11% rate “simply won’t cut it” and that companies who are at risk will not be targeted.
“Our proposals is to reduce the VAT rate to 9% for hospitality and for hairdressers. And to keep it at that rate,” she said, adding that Fine Gael’s proposal demonstrates that they “messed things up”.
“The consequences of this have been very, very serious. And this is just a very rushed attempted now to cover their tracks,” she added.
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Hmm so the VAT rate is the problem and not the cost of their insurance, rent, electricity and gas. Did I get that right? We have bailed out banks and now we’re expected to bail out the tourism sector too. How about demanding the gubbermint take on the insurance companies for the extortionate rate of cover they impose on the hotel/restaurant industry. And here’s another idea, for the gubbermint – demand that energy companies, reduce the cost of bills in line with the fall in wholesale energy prices.
@Ann Reddin: we have been bailing out private industries as back as PMPA in the seventh still paying the levy’s for that failure.
FF/FG only interested in pondering to big business, the likes of the banks with their massive amount of profits. After that comes the developers, they won’t upset them boy, they would need another tribunal. Don’t mention the greedy builders,them boys would look for hand out in the form of subsidised, on top of what they already get.
@Ann Reddin: What happened to the talk of a windfall tax on those energy companies that just ‘somehow’ managed record profit levels and didn’t bring their prices down in line with their cost, however valid the increases may have been?.
Nothing against the restaurant industry, I quite like a treat on occasion. What I don’t comprehend is why they think that their Value Added Tax should be kept at 9%, when I’m paying 9% VAT on my electricity bill.
@Ann Reddin: Government can’t hold all the cards their playing with. Really they would much rather any other global franchise in place of these sme’s.
@ben wu: the windfall tax was collected as far as I know, what happened to it after that I don’t know
@Dermot Blaine: is your mother black?
@ben wu: I have my electricity bill from October 2022 – it was €77 (for units used). I got my October bill two weeks ago and it’s €149 (for units used). I live in an apartment with solar panels, so I have constant hot water so no emersion, I don’t have a drier or a dishwasher and as there are only two of us, the washing machine is used twice a week and all of my ceilings lights are LED lights. If my bill has doubled, so have the hospitality industries, but they’d rather blame the VAT rate than energy and insurance companies. .
@Ann Reddin: If VAT is to be reduced then (a) why didn’t FG push it in budget last month & (b) why not for everyone? Why are restaurants so special???
Lower both rates by 1.5% each and let the entire economy benefit. This will cost about €2.4b and generally these types of tax reductions benefit lower income people more. Far better than the universal one off payments being given out.
@Ann Reddin: interesting to see so many people are against lowering vat rates for restaurants; they actually want to pay more tax on food and drink and want businesses to close. Bizarre.
@Ann Reddin: Yes Ann you have it perfectly right . If they don’t do something to help food / deli businesses they will continue to close at an alarming rate .
@Dermot Blaine: Really? How much?.. I can only see proposals for the tax by government but no actual amount, please let me know the figure, I’m very interested to know how the got and how it was used
@Seanie: *much
@Ann Reddin: My bills are for a 2 month period, but unit cost is lower for last one, than the one for same period in 2022.
It’s only in the last few weeks that I’ve needed to use clothes dryer, so I’m gonna really get a whopper before xmas.
We may be at cross talk on the issue though. I understand why restaurants are suffering from added costs that haven’t come down in line with the reduced changes in costs. It’s price gouging from every link in the chain.
My main point goes back to the introduction of Luxury Tax, which then evolved to become VAT.
While I get their industry is struggling, I simply can’t quite get why we should think that a ‘luxury’ of going out to a restaurant, or even fast food place.. should be on the same rate as utter basic stuff like electricity bills.
Scrap VAT on that basic stuff, maybe put some cap like 200 units a month, after which VAT comes in.
@Radical Centrist: nonsense.what people are asking is why only restaurants get reduced vat rate? Why are they so special??
If the greens are involved there will be increased carbon taxes on every single thing you do, the rest of them will promise us the sun, moon and stars to get elected, they get elected they soon suffer memory loss when it comes to all these fictional promises, I say.
Polls indicate they will be re-elected and the same 3-party govt will continue.
@9QRixo8H: those polls do not show public opinion but are geared to influence public opinions. And your post shows that it works with some who cannot think for themselves.
@North Phone Bowe: That master of manipulation of public opinion, father of PR and inspiration to all propagandists since, Edward Bernays, said almost word for word the exact same thing. “Polls are for forming public opinion, not measuring it” I’m paraphrasing from memory but you hit the nail on the head
@North Phone Bowe: Peader was bleating on about the no vote being at 12% before the referendums so I really wouldn’t give him any credence.
How much money is the likes of Colm O’Gorman getting from the taxpayers funded NGOs
Vote FG :)
@Paul M Doe: Off you go and get your department of environment test done today DOE. ???? And put up a few posters for FG while you’re out there.
@Paul M Doe: in the last several days what’s the longest you’ve went without commenting here?
@Eoin .h: he doesn’t know, he failed the test.
@Paul M Doe: the only party to vote for
@Eoin .h: it seems to run 24hrs which is not a normal scenario and I’m still surprised the journal has done nothing about it which leads me to believe they are connected. An email to the press ombudsman might help. Saying that, it could be just one fkd up individual. Fk knows tbh.
Look after the people who worked all there life
@Tony Gleeson: where life
@Tony Gleeson: rightwing parties look after Big Business, not workers.
@9QRixo8H: welcome back
@Tony Gleeson: Work on your grammar and spelling.
@9QRixo8H: Ok let’s take the black and white approach: According to Marx and Lenins ideals, there is only one left wing party that owns the entire economy. Be careful what you wish for!
I am so glad that Kathleen and Gay are reunited in heaven
@Lefty Cries: Well, you do spout a lot of fiction, so I’m not surprised you enjoy those kind of fairy tales.
@Jack Hayes: triggered by someone’s beliefs lol
Claire Kerrane & Michael Fitzmaurice to be elected on the first count, speaking common sense & with their finger on the pulse of the Nation. Just like the Referendums, shock results in store & the Main Parties & MSM to be asking what went wrong afterwards. Huge support at the doors in rural Ireland for Communities who had thousands of people dumped on them overnight.
@SV3tN8M4: you have to laugh
@SV3tN8M4: Yep John. Well said.
@Paul M Doe: When is Momma Doe going to spit out the next litter of runts.
@SV3tN8M4: have you been knocking on doors?
@Kevin Kerr: no but I’d love to knock you out
The Queers for Palestine NGOs busy today lol
@Lefty Cries: 44 murdered overnight in an Israeli declared ‘safe zone’ by Zionist attack, children included. Yet you write utter tripe like above. Only a Zionist him/herself could be so repulsive.
@North Phone Bowe: Mute the genocide supporting lunatics
@Anthony Curran: it’s you shinners that are supporting Hamas genocide
Here we go the blame game has started already, let them at it. Correct me if I’m wrong didn’t the collation government compile the budget and pass in the Dáil. Or should that read the 3 stogie government.
No comment from Helen about the wild west show on O’Connell Street yesterday.
@Jp Cleary: or the stabbing incident at 8.30 in the morning near the city west last week where armed gardai attended, so little information being put out by MSM these days, fu k I n disturbing
Contrived and fake row isn’t fooling anyone
Jail time if they don’t do what they promise to do.
@Shane O Mac:
The most ridiculous statement of the day
@P. J.: And that’s saying someone in the Journal’s comment section!
@Shane O Mac: that’s all shinners locked up so
@Paul M Doe: along with the current government
@Paul M Doe: they are not in power
No votes for the SF pedo party they are a danger to our children
Knee grows
No one coming out to get rid of the USC though? Makes me sick these liars and thieves.
@Basildon Joe: SF propose removing it from first €45k earned apparently
@Elaine Loscher: but then take in the Palestinians
@Basildon Joe: why dose the Palestinian pay usc/vat. ????
@Basildon Joe: Heaven forbid we ever find ourselves in a similar position to the Palestinian people and find that the world has turned it’s back on us and allowed our children to be used as target practice for genocidal lunatics.
@Anthony Curran: We might if we support butchers like Hamas
The Hamas rally was a total flop, a few hundred clowns in tea towels lol
This is a Big Con Job, by all the Parties, as they are trying to fool the Electorate and Businesses into thinking they will be getting some assistance. Why is the Restaurant Association of Ireland and other Representative Bodies seeking a VAT Rate Cut, as it gives them NO Savings. Cutting VAT Rates does nothing for Business, nor is it a Government Subsidy, Businesses collect VAT on their Sales and pass all that’s collected on to the Exchequer, be it at 9%, 13.5% or 23%, all that any cut will mean, is less collected, less passed on to the Exchequer. Or is these Parties saying we will cut the Rate but in turn you Businesses keep your Prices as they are, and in effect we’re giving those Businesses a Price Rise.
You just know what will happen. Hospitality gets a VAT reduction then they will up their already high prices to gouge the public once again.Lower your prices and the restaurants would be full.But these politicians would smother their own children to stay in power so this sort of comment comes as no surprise.
@Gerry Lamont: Your lack of basic knowledge about how food businesses work is unbelievable. A lot of restaurants are full but still can’t make a profit. Food prices will go up again next year as will minimum wage . Reducing prices is not the simple answer
@Alan d: if restaurants are full and can’t make a profit how are any restaurants open? That makes no sense whatsoever.
@Seanie: Many are closing in case you failed to notice. The ones that are surviving have to resort to cutting staff hours,raising prices, reducing the quality of raw ingredients , and putting suppliers invoices on the long finger.
Even McDonald’s have had to raise their prices
This is blatant buying of votes using taxpayers money. We just had a budget and they DECIDED not to do a VAT reduction for that sector, now they are promising it within 100 days, like we the people don’t have a say. We should be calling this out as a criminal act, a treasonous act. And yet some of you will continue to vote for these criminals.
And is not a sticking plaster that doesn’t really address the issue in the long term, they should be working on reducing the costs to run a business, a household, not ramping it up. We have gone mad it seems.
What about PRSI, income tax, carbon tax, USC, property tax, inheritance tax and other forms of legalised government theft against the people? Why aren’t they cut sharply? Why does this government love stealing hard-earned money off taxpayers to waste it on bike sheds, retrofitting of government buildings, crooked phone pouch contracts and dodgy construction companies with the Children’s Hospital? This move by the government is like stealing a cake off someone and then handing them back a sliver and telling them to be grateful.
the carnival of of magic tricks is gathering pace, more useless distractions to convince us they ‘work’… a percentage left or right and they’re carried through the streets on a golden chairs. Disaffection will continue until they are seen to be doing something useful, more money, more hate, more violence
So if the proposed bat rate returns to 9% does this mean that the price of food and drink and hotel stay prices go down aswell ? Or will the business’s not pass on the reduction to the consumer and keep it for themselves?
@daz Carroll: Prices won’t go down . The whole reason they are asking for the reduction is they can’t make a profit in the current environment
Ex Restaurant Owner: Value Added Tax is a tax on value added to the product but is a tax on 100% of the turnover in the case where a 0 tax food is sold in a seated restaurant even if the restaurant is not making enough margin to pay its employees and bills. It’s People Paid by Profits but the lefties don’t do logic.
@thomas molloy: who is this restaurant owner Stephen? Don’t just say a restaurant owner, that’s not credible, I could say my dog said but I really wouldn’t expect people to believe it
Small tourism business are getting no support whatsoever. Why should they be isolated from the vat reduction. Its because they have no lobby organisation to speak out for them…
I got to choose between Paschal, Mary Lou, Clare (Daly), Gary and Neasa in my constituency. Any ideas for the struggling small food service operator? Bills are rope around my neck. Seriously, you seasoned Journal commentators , give us a hint on whom to trust…
Lots of Irish criminality the past few days, including a green lad in Budapest, green mob last nite in city center, but the usual antiimmigrants are ofc so so quiet.
@Chris: Of the 12 women murdered in Ireland in 2022 and 7 women in 2023, 7 out of the 19 men accused -nearly 37%- required the services of a translator in their court appearances.
The foreign-born population of Ireland was 12% in 2022 according to CSO figures. What does that tell you?
@Staker Wallace: doesn’t tell a lot really – I wouldn’t assume any conclusions from such a small sample
@Staker Wallace: that two tier policing is a myth
@Staker Wallace: That 63% of the accused are Irish and all deserve jail time ?
@Kevin Kerr: Blind when it suits, even when facts are presented to you.
have your say