Tag: VAT rate

Shane Mclave General Manager

Shane McLave on Budget 19: VAT increase for hospitality industry ‘reckless’

Posted on | by Aisling Rafferty

The Restaurant’s Association of Ireland has called the Budget ‘thoughtless’, a sentiment that will be shared with many in the hospitality industry this week as they begin to do the sums on how the VAT increase to 13.5% will affect their business.

I, and Excel Recruitment, have always supported the campaign to KeepVatat9 and while expected, feel Tuesday ’s decision by the government was absolutely the wrong one. The Minister for Finance showed not only a lack of understanding on the difficulties faced by the industry- particularly rural and border area businesses but also complete disregard of the importance a buoyant tourism industry to the wider economy.

Budget 2019 was most certainly an election budget. While social housing and healthcare are hugely important and deserve as much funding as possible where these increases have come from have not been thought through- or fairly distributed, with employers being forced to pick up the bill. It’s not a case of business in general being hit. Most companies, including some of the country’s most profitable were unaffected by the Budget while landlords with hundreds, often thousands, of properties and few employees escaped any tax hikes at all.

‘These are the businesses that need to be protected- not placed under further pressure’

In contrast, small and medium businesses such as family-owned pubs, cafés and restaurants are going to take a big hit over the next year. These are actually the businesses that need to be protected- not placed under further pressure. Many are located in rural areas and are vital to employment and life in their local areas.

These businesses were also hit with the news that minimum wage will be increased to €9.80. It’s great that workers on minimum wage will receive an increase but on the flipside, employers are now facing an increase in VAT, an increase in minimum wage and increased employer’s PRSI. To add to the pain, both increase come into effect in January, typically the sector’s quietest month.

While the industry is far healthier than it was when the 9% rate was introduced, it still faces many challenges particularly with Brexit looming and still no idea of what the implications will be on our sector. The tourism industry has already weathered the storm of the recession and is one of our most important indigenous industry- supporting economies and creating jobs across the country. This decision is irresponsible and recklessly endangers one of the country’s biggest employers.

Shane Mclave General Manager

Budget 2019: Why Brexit is only one reason VAT at 9% must be saved

Posted on | by Aisling Rafferty

With the Budget looming, General Manager Shane Mclave offers his analysis on what this Budget, Brexit and the question mark over 9% VAT could mean for the hospitality industry

It’s the same story every year, as the hospitality industry winds down from a hectic summer season, attention turns to October’s Budget announcement and the debate around the industry’s 9% VAT rate begins again.

So will the 9% rate be kept this year or will it return to the rate of 13.5%, which was last in effect in 2011? The speculation is rampant again this year with no indications as yet from the Department of Finance as Budget Day draws nearer.Many commentators like to discuss the ‘cost’ to the Exchequer but this is an inaccurate analysis of a much bigger picture and completely ignores how beneficial the VAT rate has actually been. According to the Revenue’s own figures, in 2012, the first full year of the 9% VAT rate, income to the Exchequer was €630m from the tourist industry. This figure is anticipated to reach 1.04bn as a result of the increased activity in the sector. The 9% tourism VAT rate has been fantastic help to the Exchequer, not a hindrance.

Since the introduction of the 9% rate, the tourism industry – hotels, attractions, restaurants, B&Bs, caravan and camping sites, activity providers and many others, have created thousands of jobs. Recent figures from the Irish Tourism Industry Confederation (ITIC) show a staggering 79,100 jobs have been created in the tourism and hospitality sector since 2011.

68% of those new jobs are outside of Dublin, a feat no other industry can come close to achieving. Tourism and jobs it creates, particularly in the regions, must be supported and nurtured.

The ITIC has set ambitious goals for the industry, such as growing overseas earnings by 65%. This is only possible with government support… and the retention of the 9% rate. Any further increases in costs will achieve nothing other than stifling demand and damage one of the country’s biggest employers. Now is not the time to meddle with a successful formula that has worked so well and has so much more to offer. With unemployment so low and the minimum wage set to increase further, salaries and wages are increasing meaning the industry is facing mounting labour costs in the coming years. Now, is the exact wrong time to place further financial pressure on the industry.

What many seem to forget is that the 9% rate is not that unusual and actually brings Ireland’s tourism industry in line with the rest of Europe. 16 of 19 eurozone countries have tourism VAT rates of 10pc or less, making Ireland fully competitive with other European cities. This point can’t be stressed enough considering we still don’t know what Brexit will look like. No matter how hard or soft it is, Brexit will have an effect on Irish tourism, a fact the government must keep in mind. Irish tourism is uniquely exposed to Brexit with 40pc of all international visitors coming from Britain.

The VAT rate has enabled Ireland’s hospitality industry to do fantastic things- attracting more tourists, grow across the country and employ thousands of people. For all these reasons and so much more, Keeping Vat at 9% is an absolute must.

Retail Excellence Ireland call for Government to introduce policies to protect retailers from Brexit

Posted on | by Aisling Rafferty

Retail Excellence Ireland call for Government to introduce policies to protect retailers from Brexit, including 3% cut in VAT

Retail Excellence Ireland has called on the Government to cut VAT by 3% in the next Budget. The retail lobby group, has said Ireland’s ‘regressive’ VAT rate of 23% should be reduced to safeguard Irish retailers from the effects of Brexit. The lobby group said the 23% rate should be cut in “in one fell swoop”. Retail Excellence have previously called for a reduction in the charge but in their latest submission say any incremental reduction would have minimal effect on consumer spending.

The submission from the group including a number of measures the group feel are necessary for the government to introducing in an effort to help retailers including-

  • Immediate and emergency legislation to immediately tackle rising insurance costs
  • The introduction of a business focused bank, similar to the UK’s Metro Bank. Half of Metro Bank’s balance sheet lending is targeted at SMEs.
  • Training and financial support for businesses to set up and grow their online presence and eCommerce capabilities
  • Increased Garda presence and resources to tackle retail crime
  • A renewed focus and energy on regional town and village renewal schemes
  • Prioritise infrastructural development to encourage more FDI

The group also call on the Government to intervene on the issue of spiralling rents faced by retailers with the abolition of all upward only rent review clauses to allow all commercial tenants to pay market rents. The group say this would support many retailers who are suffering penal and unsustainable rents due to upward only leases.

In their submission, Retail Ireland Excellence pointed to the importance of retail to the Irish economy. Irish retailers operate some 45,000 businesses and directly employ some 282,000 employees.

“As a direct consequence of retail activity, €5.7 billion is contributed to the exchequer on an annual basis. Therefore, the significant of retail must not be underestimated,” said Lorraine Higgins, a spokeswoman for the organisation.