Hospitality: VAT hike will hurt jobs, publicans claim

RESTORING VAT in the hospitality sector to the standard 13.5pc rate could do lasting damage to the growing pub food trade, affecting jobs across the country, the two main publicans’ groups say.

The Licensed Vintners Association (LVA) – representing Dublin pubs – and the Vintners’ Federation of Ireland (VFI), that represents pubs outside the capital, have jointly called on the Government to retain the 9pc VAT rate in Budget 2019.

The VAT applied to the hospitality sector was cut to 9pc from the standard 13.5pc in 2011, to help the industry cope with the impact of the financial crash.

Over the summer, the Department of Finance published a review of the special rate that pointed to the likelihood of the tax break being scrapped. The review concluded, in essence, that the special rate achieved its original objectives. Officials also noted that the hotel and restaurant sectors had returned to profitability and concerns about price rises and a loss of competitiveness.

However, publicans are now arguing ahead of the Budget that the rate should be retained, noting uncertainty in the market.

“By increasing taxes on food the Government would be taking an unnecessary gamble, which would damage competitiveness in the pub sector,” they said. Both the LVA and the VFI also highlighted the high levels of excise taxes applied to alcoholic drinks – with the industry seeking a reduction in rates.