The Irish Hotels Federation (IHF) has criticized as deeply misleading recent reports that reducing the 9% VAT for hospitality businesses would cost the Exchequer €1 billion per annum
IHF Chief Executive Paul Gallagher says:
“In the lead up to the General Election and afterwards, discussions between hospitality representative bodies and the Government have always been on the basis that any VAT reduction would apply to hospitality food services only and not accommodation services.”
“To suggest anything else was on the table is disingenuous. It is time for a more honest, balanced debate – one that recognises the economic and social importance of hospitality food service businesses and gives them a fighting chance to survive. The true cost involved is significantly lower than the widely quoted figure cited by the Government in recent days.”
Figures published by the Government’s own Tax Strategy Group now confirm that the actual cost for applying the 9% VAT rate to hospitality food and catering services would be €674.6m*. An even lower cost would apply to hospitality food services alone. This discrepancy is important, as it reveals significant fiscal space that could allow for personal tax reductions in the upcoming Budget while also putting hospitality food business on a more stable footing.
Mr Gallagher says:
“The Government’s narrative has had the effect, intended or otherwise, of driving a wedge between the public and the hospitality industry, framing the VAT reduction as a giveaway to businesses. This is extremely divisive and simply not true. The 9% VAT reduction sought would apply to prepared food services, such as meals in restaurants, takeaways, commercial kitchens and food served on transport.”
“The real beneficiaries are small food businesses, many of which are operating on the brink of survival due to extreme food cost inflation and shrinking margins. Sixty-four million euro of the VAT benefit would apply to the hotels sector. Reducing VAT on food services is not a handout to hospitality businesses – it is a vital intervention for a sector that supports over 270,000 livelihoods and contributes significantly to the economy.”
Tourism at a Glance
As Ireland’s largest indigenous employer, a vibrant and thriving tourism and hospitality industry is vital for the country’s economic well-being:
- 270,000 livelihoods supported by Irish tourism & hospitality
- 69,000 people directly employed by Irish hotels & guesthouses
- Regional employment – some 70% of tourism & hospitality jobs are outside of Dublin
- €10bn in revenue generated by tourism annually for the economy
- Over €2.9bn in taxes generated annually for the State by tourism-related activity
