The VAT rate on hospitality is “absolutely certain” to rise in September, Eamon Ryan has told Newstalk Breakfast.
The 9% rate was first introduced in 2011 as Ireland struggled to recover from the economic crash; with the economy growing strongly once again, the rate was raised in Budget 2019 to 13.5%.
The VAT rate was cut again to 9% during the pandemic as the sector was left reeling from lockdown and restrictions on international travel.
The Government announced in the Budget that the rate would return to 13.5% in March but has since delayed that until the end of the summer.
The cost to the taxpayer will be an estimated €300 million and Green Party leader said this would be the sector’s last reprieve.
“It is significant,” Minister Ryan told Newstalk Breakfast.
“One thing is absolutely certain and you can haul me back in here if on 1st September this doesn’t happen - it will be raised at the end of August.”
The hospitality sector is strongly opposed any rise in the VAT rate and has raised concerns that some small businesses could be forced to close.
'Haul me over the coals'
Despite this, Minister Ryan said their pleas would fall on deaf ears.
“Haul me over the coals if that doesn’t happen,” he said.
“The main time for allocation is in the Budget and in that period in October, we do need to know that we have the tax base to be able to provide for housing, social welfare, health and education and so on.
“I think those sorts of measures are needed to help us do that.
“Economics is a very uncertain science but the argument was made that inflation is coming down at the moment.
“Let’s just time some of these [measures] so we see it go down further - because when you put up the prices through a measure like that it does have [an impact].
“I think it’s about 0.2 or 0.3% of an increase in inflation it causes and the argument was made, ‘Well listen, with inflation on the way down, let’s keep it going down because that is actually a good economic strategy.’”
Outdoor dining in Cork. Credit: Damian Coleman/Alamy Live NewsYou can listen back here:
Main image: Green Party leader Eamon Ryan at Leinster House. Picture by: Sasko Lazorov/RollingNews
