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Finance Minister Michael Noonan has signalled the lower 9% VAT rate for the tourism and hospitality sector will revert to 13.5% at the end of the year. A final decision on the contentious topic will be announced on Budget Day. However, Noonan has warned that keeping the rate at 9% would either mean another spending cut or tax hike elsewhere.
The Minister says while the lower rate created jobs in the hospitality sector, the wider cost of the measure was higher:
The lower tax rate was introduced in 2011, and applies to businesses such as restaurants, hotels, cinemas, hairdressing and newspapers. Many involved in these businesses have voiced their objections to the proposed VAT rate increase.
Chef Neven Maguire talked to Newstalk Breakfast earlier in the week at the National Ploughing Championship. Maguire stated that he believes the lower VAT rate has genuinely helped restaurants and hotels around the country, including his own McNean House.
On the subject of a possible increase, Neven observed "I'm one of the faces of the campaign [for the lower rate]. It's going to keep people in employment... we [also] passed it on to the customer. It's very important that they keep it. I think the bigger picture is you lose jobs, and I definitely think it will affect the whole tourism industry, and I would urge the Government to really think about it and give it another few years. It was a fantastic initiative and we need it and we want it to stay".
Do you think a VAT increase would reduce your spending in terms of your social life? Would you be less inclined to visit restaurants, cinemas, hairdressers and other businesses if there was a price hike following the budget? Vote in our poll and leave your comments below.
