Nearly 600 restaurants close in a year as VAT rate ruled out by Paschal Donohoe
Public Expenditure Minister Paschal Donohoe dashed hopes on Thursday that the VAT rate will be cut, stating that it was always a temporary pandemic measure,
Nearly 600 restaurants have closed in the last year amid growing calls for the VAT rate for the hospitality industry to be reduced back to nine percent in the upcoming budget.
However, Public Expenditure Minister Paschal Donohoe dashed hopes on Thursday that the VAT rate will be cut, stating that it was always a temporary pandemic measure,
The Restaurants Association of Ireland (RAI) revealed the number of restaurants, cafés and other food-led businesses forced to close their doors for good since the hike in the hospitality sector’s VAT rate from nine percent to 13.5% last September has reached a total of 577.
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A total of 45 restaurants, cafés and other food-led businesses ceased trading in July, bringing the cumulative number of closures to 577 since the VAT rate rose from nine percent to 13.5%, the lobby group said.
In a recent survey of 212 members of the Restaurants Association of Ireland, 74% of respondents believe they will have to close their businesses if the VAT rate on food is not reinstated to nine percent in October’s Budget. Some 66% of respondents admitted they would have already shut their doors if not for the ongoing campaign advocating for the return of the lower VAT rate.
Adrian Cummins, CEO of the Restaurants Association of Ireland that while the pace of closures has “slowed slightly” during the summer compared to a “tsunami” at the start of the year, many “businesses are holding on by a thread”.
“The reality is that these businesses are still in crisis and, without a return to the lower VAT rate, we are guaranteed to see another wave of closures as we leave the summer behind and move into the hospitality sector’s quieter months,” he said.
”The current situation is unsustainable.”
However, Minister Donohoe ruled out the prospect of the lower VAT being returned.
“When we made the reduction in the VAT rate to nine percent, that was as part of the measures that we brought in to support the hospitality sector during the COVID pandemic,” he told the Irish Mirror.
“I always made clear that the moment the impact of that pandemic lightened, we will go back up to the normal VAT rate of 12.5%.
"Of course, I always regret when I see any small business within our country close.
“But it was made very, very clear at the time in which we moved down to the lower VAT rate that it was a temporary measure to help deal with the effects of the hospitality sector being closed and then only partially open for so long."
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