Lower VAT rate helps create 2,400 local jobs
A RECENT report published by the Restaurant Association of Ireland (RAI) has revealed that 2,399 new jobs in the Accommodation and Food Services sector have been created in County Wicklow since the introduction of the reduced VAT rate of nine per cent in July 2011.
This report identifies the direct and indirect employment associated with the introduction of the reduced VAT rate. Between Q2 2011 and Q1 2018, the number of people working in the Accommodation and Food Services sector nationally increased by 54,400, taking total employment from 117,300 to 171,700 on a seasonally adjusted basis.
The RAI is urging the government to retain the rate as they believe it has improved the competitiveness of the sector, while ensuring the viability of many small businesses that have been going through challenging times. The RAI is asking Minister for Finance and Public Expenditure, Paschal Donohoe not to return the VAT rate to 13.5 per cent.
In Q1 2018, it is estimated that 5,136 workers were employed directly in the sector in County Wicklow. The total gross annual wage paid to those workers was €119 million. The total net annual wage paid to those workers was €105 million. The payroll taxes accruing to the Exchequer from this employment was €26.2 million. Indirect employment as a result of direct employment in the sector is estimated at 2,363.
Total employment in the Accommodation and Food Services sector in County Wicklow increased by 1,643 between Q2 2011 and Q1 2018. The total gross annual wage paid to those extra workers is €38 million. The total net annual wage paid to those extra workers is €33.7 million. The payroll taxes accruing to the Exchequer from this extra employment is €8.4 million. Indirect employment as a result of the change in direct employment in the sector is estimated at 756.
Speaking about the success of the reduced VAT rate in recent years, Adrian Cummins, Chief Executive of the Restaurants Association of Ireland, said: ‘In terms of creating new jobs in the hospitality sector, the introduction of the nine per cent VAT rate in July 2011 has been a major driver of local employment growth.’