The Vintners’ Federation of Ireland believes that the decision by the Government to increase the hospitality VAT rate to 13.5% is “a shocking and retrograde step that will cause excessive damage to the sector”.
In his response, VFI Chief Executive Padraig Cribben described the removal of the 9% VAT rate as “a kick in the teeth for the hospitality sector.
“It will introduce uncertainty and undermine confidence in many pubs selling food who’re already worried about their exposure to the effects of Brexit. Publicans in areas of the country where the recovery is weak will be disproportionately affected.
“During the recession many pubs invested heavily in a food offering that provided exceptional value to consumers along with job security to staff. The VAT increase will reduce competitiveness and force many of those pubs to cut staffing levels. It’s simply impossible for most business owners to absorb this increase,” he stated, describing the VAT increase as “a hammer blow to our members who employ over 40,000 people and will have long-term consequences. Removing this support to food operators at the stroke of a pen is a betrayal of all those who give everything in a high-risk sector.
“It is further evidence, if it was needed, that our Minister for Tourism Shane Ross TD has once again failed the hospitality sector, wilfully ignoring the need for regional support beyond the narrow confines of his own constituency.
“As an incentive to stimulate growth and employment the special VAT rate has been a success and provided exceptional return on investment. In removing the 9% rate, the Government have made a grave error that will cost jobs and kill growth,” he concluded.
NOffLA seeks rolling back of “emergency measure” excise
In its response, the National Off-Licence Association criticised the Government’s decision not to decrease excise duty on alcohol in Budget 2019. The decision locks the independent off-licence sector out of the economic recovery and will leave members exposed to Brexit-related cross-border trade, it stated.
“NOffLA acknowledges the Government’s decision to retain the current level of excise on alcohol but is disappointed that the Government has failed to recognise the commercial realities for the independent off-licence sector and the Brexit-related threats that our members are facing,” Evelyn Jones, NOffLA’s Government Affairs Director, commented of the announcement, the final Budget before the UK leaves the European Union in March 2019.
“Increases in excise duty were emergency measures, implemented in times of economic need,” she said, “Ireland’s economy is now the fastest-growing in Europe and so like USC and other emergency measures, these must be rolled back.
“NOffLA members are under serious threat due to cross-border trade following on from the 15% reduction in the value of the Sterling since the Brexit referendum in 2016,” she said, “There is now a 25% difference in the cost of alcohol between Ireland and the UK.
“Since 2008 some 3,000 jobs – 34% of the sector – have been lost and 554 off-licences have closed. NOffLA members across Ireland continue to face significant commercial challenges due to our excise regime and will now be exposed to unprecedented cross-border trade should the Pound Sterling continue to depreciate throughout Brexit negotiations.”
For its part, the Drinks Industry Group of Ireland stated that the failure to reduce excise tax and the increasing of the VAT rate for the hospitality sector restricts growth and trade in the face of Brexit.
“DIGI is disappointed by the Government’s decision not to reduce excise tax on alcohol while simultaneously increasing the VAT rate to 13.5%,” commented a DIGI spokesperson, describing it as “a bad budget for tourism.
“While it’s encouraging to see that the Government are Brexit-proofing certain sectors, Budget19 has failed to extend this to an industry that employs over 250,000 in the drinks and tourism sector and exports almost €300 million to the UK annually.
“With the Brexit deadline looming and a hard Brexit looking increasingly likely, we are facing an uncertain economic period. Now is the time to introduce measures to stimulate the economy rather than increasing costs on consumers. DIGI will continue campaigning for a reduction in alcohol excise tax in 2019.”
The drinks and hospitality sector is among the most exposed to Brexit and as a result of this Budget the industry and consumers now face more costs rather than less, stated the DIGI.