Menu featuring the newly added extra taxes applied by the Government

Government driven prices rises on the menu from tomorrow

Government driven price rises will be on the menu for pubs and restaurants from tomorrow with the increased rate of hospitality VAT set to kick in, the Licensed Vintners Association (LVA) has warned.

The LVA and other hospitality groups had been seeking a continuation of the current 9% VAT rate that applies on food but the Government made the decision to increase the VAT rate to 13.5% – a 50% rise in the level of VAT applied.

The LVA believes that this rise is coming at a time when there is already an extraordinarily high rate of inflation on ingredient purchases and the cost of food preparation in what is a labour intensive, low margin business. They also believe that the jump in taxation will add to inflation in the economy at a time when the public are facing expensive “back to school” costs, higher mortgage interest rates and high energy costs as we enter the autumn.

“We are very disappointed that the Government has decided to add to inflation with this unnecessary increase in taxation on food,” said Donall O’Keeffe, Chief Executive of the LVA. “The 9% VAT rate on food purchased in hospitality settings was at the right level, both from the point of view of domestic consumers and attracting tourism.

“By moving ahead with the VAT rise, we will effectively see menus changed across the country so the Government can collect additional taxation from the public – heaping further pressure on already hard-pressed consumers.

“With the Exchequer in such a strong position, there was no reason why 9% VAT on food couldn’t have been maintained. Research conducted by Red C earlier this summer showed that 6 out of 10 members of the public wanted the 9% VAT rate to continue, so this move clearly doesn’t have public support.

“Where this will be most keenly felt is in the discretionary activity like enjoying lunch or dinner in local pubs, cafes and restaurants. When the pinch in business is felt in hospitality around the country in the months ahead, they will know that it was specifically applied by the Government,” Mr. O’Keeffe concluded.

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