A mooted hike in the rate of VAT on hospitality would “send small businesses over the edge”, a restaurateur has said. 

In 2020 the rate was slashed from 13.5% to 9% to help pubs, restaurants and hotels cope with the drop in business associated with the pandemic. 

Now COVID restrictions have been lifted the Irish Examiner reports that Minister for Finance Paschal Donohoe wants to return to its original rate in this month’s budget. 

However, JP McMahon, a celebrity chef and restaurateur, says hiking the tax is a bad idea in the midst of an energy crisis: 

“We closed our Tartare [cafe] last Sunday because of energy, inflation, staff shortage and wage inflation,” he told The Hard Shoulder. 

“And if you throw 4% VAT on top of that it is going to send small to medium sized businesses over the edge who can’t deal with it. 

“We’re literally looking at energy bills that are coming in in the ten of thousands - not in the thousands. 

“Thousands used to be the normal, now tens of thousands.” 

Mr McMahon says businesses are still holding their breath, waiting to see what help the Government will provide them with in this month’s budget. 

Chief Whip Jack Chambers has promised “a pandemic-scale response” but Mr McMahon wonders if it means the Government will end up taking with one hand and giving with another. 

“If they give you 8% off your bill and 4% back, that is the way things work normally,” he said wearily. 

“I mean look, that would be better than nothing. I do think it’s a not a good time to increase the VAT. 

“I understand it has to go back up but I would be thinking before next summer or something? I think you need to get through the winter and the spring.” 

He hopes that by next summer the energy crisis will have stabilised and businesses will be better placed to cope with any tax rises.

Main image: A busy restaurant. Picture by: Damian Coleman/Alamy Live News