The Taoiseach has insisted that reducing the VAT rate for hospitality would have led to many more small businesses demanding the same.

Hospitality and tourism groups have slammed yesterday’s budget – warning that Government’s failure to protest bars, cafés and restaurants will lead to the closure of “a huge number of businesses across the country” in the coming months.

The Vintners’ Federation of Ireland described the budget as “devastating” for the hospitality industry, while the Irish Hotels Federation warned that Government had offered “next to nothing” for the sector.

Separately, the Irish Tourism Industry Confederation warned that rural tourism businesses will be hardest hit by the failure to protect hospitality.

Well over 600 food businesses have been forced to close their doors since the hospitality VAT rate was returned to 13.5%.

On Newstalk Breakfast this morning, the Taoiseach Simon Harris defended the decision not to reduce the VAT rate.

“While the government wasn't in a position yesterday to do the 9% VAT rate, let's also acknowledge that [there are] lots of sectors of the economy, lots of small businesses that would have wanted changes to their VAT rate,” he said.

“So, if you pulled that thread, I’m not sure where we would have ended up overall.”

He insisted the Government did “a number of things” to help food businesses in the budget – including the expanded energy support scheme which will offer hospitality and retail businesses up to €4,000 tax-free between now and Christmas.

“We also increased the earned income tax credit for people who are self-employed – many of those people running cafes, running restaurants.

“We did increase the threshold for VAT – so people who are having less of a turnover, they won't have to pay that.”

Minister’s Jack Chambers and Paschal Donohoe on the steps of Leinster House. Image: Alamy

Mr Harris said Government also “listened” to businesses by opting against moving forward with plans to expand the number of sick days available to workers to 10.

“You know what we've most importantly done for business?” he asked.

“We put more money in their customer's pockets.

“We've reduced the USC by a percentage point that will benefit all people working in our economy.

“We've increased the income threshold at which you pay the higher rate of tax and we've provided people with more disposable income as well.”

The Taoiseach said Government will “continue to keep these things under review” adding that he does believe there is a “broader conversation and I want to have it with the hospitality sector about the cost base that small and medium businesses face in this country”.

The Taoiseach also rejected claims from Social Democrats leader Holly Cairns that the government was trying to buy the election with yesterday’s budget insisting the comment was nothing but a “sound bite”.

He also refused to be drawn on when the election would be held – insisting he would not be “providing a running commentary” on the Government’s plans in the coming weeks.

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