Restaurant closures cost €288m loss to Irish State
THE closure of restaurants and cafes is losing the Irish economy hundreds of millions, a report has said.
So far this year, 212 food-led businesses have shut their doors across the country, which could lead up to a €288million loss to the State.
The report, ordered by the Restaurants Association of Ireland and undertaken by economist Jim Power, calculates every restaurant, cafe, or food business that shuts leads to a loss to the economy of €1.36m.
This breaks down to €576,554 in gross wages being lost, €115,310 in payroll taxes to the Exchequer, €105,000 in VAT receipts, €11,874 in commercial rates to local authorities and €4,583 in water charge receipts.
With every closure on average 22 people lose their jobs, and if they all go on social welfare, the annual cost would work out at around €400,000.
RAI chief Adrian Cummins said the report lays out the “stark reality” of how damaging hospitality closures are.
He told RTE Radio One’s Morning Ireland: “The assumption among civil servants and in certain other quarters that where one restaurant closes down, another will shortly open is unfounded, particularly in parts of the country outside of Dublin.
“When a local restaurant or cafe closes and its staff is laid off, it is not a simple case of them finding another good job nearby or the business reopening under new ownership.”
The organisation wants to see a return of the 9% VAT rate which was introduced during Covid-19, but for food-related businesses only.
A return to the 9% VAT rate from the current 13.5% would cost €545m a year, according to the Department of Finance.
However, the RAI claims if 400 restaurants close, the State would lose more money than it would cost to lower the VAT rate to 9%.