Vintners say raising VAT rate clearly damaging to hospitality
Food accounts for 35% of turnover in average Dublin pub, for many it is at 50/50
The Licensed Vintners Association (LVA) has said they plan to make the restoration of VAT 9% for food an election issue in the run up to the Local and European Elections this summer. They will begin writing to all public representatives for Dublin on this issue this week, seeking their commitment for restoring the lower rate of VAT for food and highlighting how the Government measure has been damaging to hospitality.
Taoiseach Leo Varadkar TD recently said a reduction in VAT for food “warrants consideration”, while several prominent politicians have already expressed their support for the reintroduction the 9% rate for food, including Minister of State Neale Richmond TD. There will also be a motion in Dáil Éireann this coming week on the issue.
The 9% VAT rate for food had been in place for 10 of the last 12 years, before it was scrapped by Government last September. For the average Dublin pub, 35% of their turnover comes from food. That figure rises to 50% of turnover for a significant number of food focused pubs across the capital.
The LVA says since the Government increased the VAT rate on food last autumn, food businesses were forced to raise their menu prices. Pubs across Dublin have highlighted how damaging this has been, with customers also expressing their distaste for the measure.
The vintners plan to write to politicians across the capital asking them whether they support the reinstatement of VAT 9% specifically for food, and they will be asking their members to do the same to their local public representatives.
“The simple fact of the matter is that the Government should never have increased the VAT rate for food last year,” said Donall O’Keeffe, CEO of the LVA. “It immediately pushed the level of taxation applied to food up by 50% and that had an instant knock on impact on menu prices.
“The public didn’t like that and neither did the wider hospitality sector. Customer spending on out of home meals is discretionary and it is influenced by pricing, especially in an already volatile cost of living environment. So, that Government instigated increase was damaging to the hospitality sector, our wider tourism sector and it is having really significant consequences for food led businesses.
“The Government are now seeing the impact of that decision. There are hospitality businesses having to shut their doors for good on a near daily basis. Raising the VAT rate on food and then quickly following that up with the imposition of other mandatory costs for small, low margin businesses such as the increased minimum wage, the increased sick leave entitlements, the extra employers’ PRSI and the pension auto-enrolment is making the trading environment extremely challenging and the Government needs to recognise that fact.
“We have seen a number of politicians already speak up on this issue and say that the 9% VAT rate on food should be restored. Accordingly, we will be writing to all the public representatives across the capital and asking them to simply state whether they support a reduced VAT rate for food or not. The politicians can also expect to hear from the publicans in their respective constituencies on this matter.
“We hope this will help focus minds and that the Government will take action on the VAT rate before more food led businesses go to the wall. The industry is crying out for this issue to be addressed and the politicians would be wise to reflect on that matter in an election year and with a General Election also on the horizon,” Mr. O’Keeffe concluded.