Hospitality VAT increase ‘tax on consumer’, says VFI

The Vintners Federation of Ireland says the increase in the VAT rate is extremely disappointing

The report predicts that consumer spend in IoI pubs in 2022 will reach €1.32 billion, a 156.3% increase over '21's €515 million figure.

The decision by the Government to increase the hospitality VAT rate from 9% to 13.5% from 1 September is extremely disappointing and is a tax on the consumer, says the Vintners Federation of Ireland (VFI).

For pubs serving food the special 9% VAT rate was a crucial intervention at a time when the cost of doing business continues to soar. Ever since Covid restrictions were removed publicans have faced price increases across the board from energy to labour alongside food and drink.

VFI president John Clendennen says: “The decision to increase the VAT rate for hospitality is effectively a tax on the consumer and comes at a time when publicans are dealing with rampant inflation that has decimated margins and seen some pubs go out of business. 

“The government acknowledged that fact by extending the hospitality VAT rate last February for another six months but the basic economics of the situation have only worsened since then. The special VAT rate was a vital intervention that allowed pubs serving food some respite from the soaring cost of doing business.

“Increasing VAT to 13.5% will negatively impact the trade as the summer season ends and a quieter autumn trading period arrives. Customers are already feeling the pinch with cost of living increases so this is a short-sighted move by government that will lead to concerns about long-term viability,” concludes the VFI President. 

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