‘Ludicrous VAT hike will shut restaurants’
Recovery hasn’t hit all areas, Donohoe is warned
PLANS to push up the VAT charged on the hospitality sector will force restaurants to shut their doors, a top Dublin chef has warned.
Gaz Smith described the looming hike as an ‘absolute disaster’ for restaurateurs.
Earlier this month a number of popular Dublin restaurants ceased trading when Joe Macken’s Jo Burger Group went into liquidation.
And critics of the new rate warned the hike will hit rural communities the hardest.
Deirdre McGlone, owner of Harvey’s Point Hotel in Co. Donegal, warned that the recovery Government ministers boast about hasn’t hit rural areas and businesses in those areas will be hardest hit by the increase.
As of next Tuesday, January 1, the rate for the sector, including everything from hotels, beauticians and restaurants, will rise from 9% to 13.5%. ‘We’re left in Lose-lose: Chef Gaz Smith the position where we have to pass this on to the customers,’ Mr Smith said.
‘This couldn’t have come at a worse time because we’re walking into Brexit and no one knows how the chips will fall.’
The measure – abolishing the hospitality special rate – was announced in Finance Minister Paschal Donohoe’s Budget speech in October.
The 9% reduced rate was introduced in 2011 on a range of goods and services, including accommodation, restaurants and hairdressers, in an attempt to alleviate some of the financial stresses on the tourism sector during the recession.
The cost to the State was estimated at €350million a year.
‘Restaurateurs will have to pass the increase on to custom- ers, reduce the quality of ingredients or cut staff,’ Mr Smith said. ‘It’s a lose-lose situation.’
The Wexford native, who started out in the industry at 15, returned from working in Vienna to take over Michael’s, a small neighbourhood restaurant in Mount Merrion, south Dublin, with his wife Rita. The husband and wife team celebrated one year in business in July.
He said the couple had been so cash-strapped when they were setting up the business that they could not afford to change the name above the door.
‘We had €500 in our pockets and the new sign was going to be €450 so it was a choice of either changing the name or buying food to sell,’ he said.
He added that the special rate had given them the leeway to survive.
‘An almost 50% increase in the rate, it’s just ludicrous,’ he said.
‘It will have a knock-on effect. We’ll start seeing closures. There were some places that were hoping to get to spring but they have already given up the fight.’
He and his wife had already turned down an opportunity to take on a second restaurant.
Meanwhile, Ms McGlone, of Harvey’s Point, said: ‘We’re beside the border, the economic recovery has been slower here. Decisions were made that were relative to Dublin properties rather than the family-run businesses around the country that struggle to survive all year round and to make ends meet.’
‘Couldn’t have come at a worse time’