Restaurant owners and hairdressers are made to repeatedly "beg" to keep VAT rates at 9%, according to restauranter Paul Treyvaud.
It comes as insolvency rates in the hospitality sector have increased by 214% in the first half of 2023, figures from credit risk analyst CRIFVision-Net show.
Despite that, the Government is due to increase the VAT rate from 9% to the previous 13.5% in September.
To prevent this, the Hairdressers Federation and the Restaurants Association have come together to try to prevent the rise of VAT in their sectors.
On The Pat Kenny Show, restauranter Paul Treyvaud said Government is facing a potential influx of businesses folding this winter.
"The problem with seasonal areas is that getting in the revenue during the summer to get you through the winter just isn't happening," he said.
"It's obviously very challenging at the moment, particularly in rural Ireland. A lot of towns are down a significant amount of accommodation."
A restaurant Image: Hemis / AlamyVAT rate
Mr Treyvaud said he has become "sick and tired" of discussing the hospitality VAT rate
"The reality of it is that prices have gone through the roof because the cost of doing business has gone through the roof," he said.
"What the Government needs to do is to stop this Oliver scene every six months with the restaurants and the hairdressers coming up saying, 'Please sir, can I have some more? Leave it at 9%.'
"We negotiate deals 12 or 24 months out for tour operators, and you can't turn around now and say, 'Listen, it's €20 for whatever, [but] by the way, I need to put up another for €4 because the VAT is going up maybe next February.
"So, they need to set the rate and that's what it is. We've proven that 9% is very efficient because we have a massive surplus from the multinationals."
'Messing around'
The Government need to focus on "small business" and stop "messing around" with their VAT rates, according to Mr Treyvaud.
"We need to set the rate – the Government needs to know obviously the consequences of increasing it back to 13.5%," he said.
"That's a serious increase in prices across the board, whether it be hairdressers or restaurants ... the reality is, if we put it back to 13.5%, say goodbye to another 10% of the businesses."
File Photo: Hairdressers, Photo: RollingNews.ieHairdressers
President of the Irish Hairdressers Federation (IHF), Lisa Eccles said salons have not been able to return to pre-pandemic staffing levels.
"This VAT increase, to bring it back up again to 13.5%, is just going to further affect salons, it's going to further affect people coming to salons to get their hair done," she said.
"The fear is that that will actually drive people then into that shadow economy where the Government doesn't receive any tax.
"We spoke with the Minister back in February, they had seen that the decision to leave it at the 9% was going to help us through the summer.
"I don't understand why we have to keep coming back and having this conversation around the 9%.
"We are a labour-intensive industry, we need people in the salons working so it just makes sense to help the employment in that."
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