“VAT to remain at 9%” – Cyril McAree

Wednesday, June 08, 2022.
"VAT to remain at 9%" - Cyril McAree

The extension of the 9% VAT rate until February 2023 has been universally welcomed by all within the industry

The recent effects of the pandemic, food inflation and the ongoing crisis in Ukraine, has severely impacted on the sector. Many businesses, particularly restaurants, are struggling to remain competitive and considered any VAT increases a challenge that they may not have been able to trade through. This decision, along with previous government supports, is to be welcomed – and will hopefully allow businesses to continue trading.

Year-on-year increases in costs – energy, insurance, wages, etc. – are putting a financial strain on many businesses trying to recover from the impact of the pandemic. The true impact of Covid is still being evaluated but few other sectors were hit by the crisis as much hospitality. Some within the industry feel the rate should be extended further to ensure the industry remains competitive. The IHF, for example, suggest it should be extended until 2025. Before the pandemic, the industry employed in excess of 270,000 people. Jobs must now be protected for the future.

The Irish Tourism Industry Confederation (ITIC) recently held a successful conference in Croke Park. ITIC includes stakeholders from Irish Hotels Federation, DAA, Irish Ferries, Aer Lingus, the Restaurant Association of Ireland, and numerous others working within tourism. The conference was run under the heading of Tourism Sustainability, on-trend buzz words at the moment. Latest predictions from ITIC suggest tourist numbers could be around 67% of 2019 figures, with a full recovery happening in or around 2026.

Inflation and the war in Ukraine are continuing to impact our fiscal situation in Ireland – factors outside the government’s control. The Minister forTourism, Catherine Martin TD, speaking at the conference, stressed that the sector must continue to be competitive and ensure value for money. Her commitment for the retention of VAT was heard at the cabinet table – and this should be acknowledged as a job well done. It is refreshing to experience a minister who listens and reacts to the needs of the sector. Long may it continue…

The continuing problem of attracting people into the sector, however, remains a considerable challenge.The solution must involve all the stakeholders – not just a minority. It is up to the whole sector to portray the opportunities it has to offer, the sustainable career choices, and the supports embedded with the industry to help people achieve advancement.

Investment in training must now gather pace. Other countries train young people in hotels and therefore ensure a continual flow of candidates into the industry. Should we do the same? Should we also focus on an older market of potential employees? Parents with school-going children, for example, might welcome the chance to re-engage with the workforce, but are put off due to rigid hours and excessive childminding charges.

More flexibility will be needed to resolve this staffing issue. But it’s never too late to start.

– Cyril McAree

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