Ibec, the group that represents Irish business, has said that it is imperative that government make permanent the temporary 9% rate of VAT for the Experience Economy.
The Experience Economy is a diverse and substantial part of Irish life including hospitality, retail, travel, food, drink, tourism, entertainment, the arts, events, and activities that span many sectors and the entire country.
Ahead of tomorrow’s expected Cost of Living package from Government, Ibec has said that the 9% rate, which is due to end this month, has been instrumental in helping businesses stay afloat and maintaining many jobs across the country. Removal of this buffer at this time will put many in the Experience Economy, particularly SMEs, in jeopardy, and only stands to add to inflationary pressures and undermine international competitiveness.
Ibec Executive Director of Membership and Sectors, Sharon Higgins, said: “Like all sectors of the economy, the Experience Economy is facing significant challenges. Inflationary costs are adding to the pressures of businesses in the Experience Economy, many of whom were brought to the brink as they complied with public health restrictions during the Covid-19 pandemic. These further emerging economic challenges are coming at a time when many are still planning a route back to viability.
“Across the country, many businesses in the Experience Economy are operating on continually tight margins that are impacting on day-to-day business decision-making, including staffing. A return to the 13.5% rat of VAT, the third highest rate of VAT for the Experience Economy in Europe, would significantly harm the viability of this important sector.
“We recognise that Government is dealing with how best to help consumers and businesses cope with the current significant cost of living issues and we urge that tomorrow’s package will see the 9% rate of VAT made permanent.”
The Experience Economy employs over 300,000 people, or 20% of the private sector workforce, it is worth €4 billion to the Irish economy.