Hospitality VAT reduction not supporting 3,500 ‘wet’ pubs 

A reduction in the hospitality VAT rate on its own will not support up to 3,500 ‘wet’ houses, currently closed, the Licensed Vintners Association, the Vintners Federation of Ireland and Drinks Ireland have stated, whereas a VAT cut on the sale of on-trade alcohol itself will deliver an instant and much-needed cash injection to these pubs closed for almost four months now.

Indeed without this support, these 3,500 business that create employment in the most employment-intensive and regional domestic industry in Ireland may never re-open.

And a reduction in the VAT rate on on-trade alcohol is “an administratively simpler way of getting money to where it’s needed rather than through complex schemes,” points out Drinks Ireland Director Patricia Callan.

Only 20% of the schemes currently in place to support businesses have been drawn down which could potentially be due to an administratively complicated application process. For example, only €89 million of the €250 million available in the Government Restart Grant has been utilised.

“The government has indicated this week that their focus is on businesses and implementing measures that will make businesses impacted by Covid viable,” continued Patricia Callan, “A VAT rate reduction on the on-trade sales of alcohol specifically will deliver that. It’s easy to implement, it’s tangible and it will go directly to reducing the costs of a significant network of businesses across the country.”

The LVA, VFI and Drinks Ireland are calling for this temporary measure until the 31^st of December.

A reduction in the VAT rate on alcohol (currently 23%) is being sought to safeguard 22,500 jobs, dominated by large numbers of young workers as pubs are on track for a 50% decline in business for the remainder of 2020, according to a report authored by DCU Economist Anthony Foley published last week.

The drinks and hospitality industry is one of the largest employers of young people right across the country and according to the LVA and VFI, in the majority of pubs young people account for over half the workforce.

‘The economy needs businesses to re-open so people can get back to work, earn a living and pay their taxes, reducing the reliance on government support,” said VFI Chief Executive Padraig Cribben, “Crucially, pubs need some certainty and today that does not exist. Pub owners, which have yet to re-open, are considering the re-opening and are worried that the reduced capacity due to guidelines, coupled with decreased consumer confidence and a reluctance to go out among people, will make it unfeasible to re-open. If some certainty and clarity existed with regard to tangible supports that would reduce costs, they would re-open.”

LVA Chief Executive Donall O’Keeffe added, “Without pubs, our cities, towns and villages will not re-open. Not only do pubs provide employment, they provide vibrancy and bring life to our city centres, suburbs and the main streets in our rural towns. We need to encourage consumer confidence to support the revival and recovery of our economy. A cut in VAT on alcohol on on-trade sales will give pubs the boost they need to re-open and trade”.

Follow the Protect our Pubs campaign at #NewGovProtectourPubs.