VAT rise ‘a nail in the coff in for restaurants’
RESTAURANT owners have warned they will have no choice but to pass on any VAT rate increase to customers, saying such a move would be ‘another nail in the coffin’ for the crisis-hit sector.
A 3.5% cut in VAT to ease pressure on the hospitality sector introduced at the peak of the Covid-19 emergency is due to end in August.
Finance Minister Paschal Donohoe is anxious to recoup revenue lost to the exchequer as a result of the pandemic supports, but industry leaders warn this would be a tipping point for many restaurants already struggling to keep their heads above water.
Restaurants Association of Ireland (RAI) chief executive Adrian Cummins told the Irish Mail on Sunday: ‘It is vitally important the [current] 9% rate is maintained for months and indeed years ahead.
‘We are calling for a clear indication from the finance minister in the light of rising inflation specifically affecting hospitality that the rate is not increased.
‘Such are the tight margins being experienced by hospitality we will have no option but to pass on any increase.’
This was echoed by Gina
Murphy, the owner of Hugo’s Restaurant in Dublin’s city centre, who said reversing the VAT cut ‘would directly increase our prices at a time when we are already being hit by price increases in every other aspect of the business’.
She told the MoS: ‘Putting an extra charge onto the consumer, which could ultimately affect people choosing to dine with us or not, would be another nail in the coffin of the hospitality industry.
‘If the Government is serious about helping hospitality back on its feet they will not even dream of looking at this.’
‘Restaurants run on very, very tight margins and slippage – even by 1% or 2% – is the difference between breaking even and making a loss.
‘Everything right now is price sensitive and every other part of the business is carrying massive price increases.’
Ms Murphy said her restaurant’s utility bills were about €5,500 every two months before the pandemic, but have now risen to around €8,000, even though the business is only operating four days a week rather than seven.
The increasing price of food is also hitting hard, with a box of butter that was €51 five weeks ago now €72.
The restaurateur said that while trading has generally been good since the lifting of Covid restrictions, she is struggling to find trained staff as so many left the industry during the pandemic.
To ease staff shortages, she urged the Government to look at a fast-tracked visa application process for skilled workers from other countries and to place more emphasis on apprenticeships.
A recent meeting of TDs and senators heard wage inflation in the sector is hitting 30%, heaping more pressure on businesses.
‘It’s vitally important the 9% rate is maintained’