Nine out of 10 Dublin pubs (92%) say the upcoming rise of the tourism and hospitality VAT rate will have a negative impact on their business, a survey from the Licensed Vintners Association (LVA) has found. This follows on from the Government’s announcement that the 9% VAT rate for tourism and hospitality is set to increase to 13.5% from the end of February, representing a 50% jump on VAT.
The LVA says this will impose additional inflation on hospitality at a time when there are widespread costs accumulating across the sector. They are calling on the Government to extend the 9% VAT rate throughout 2023.
The LVA ‘Cost of Doing Business Survey’ also highlighted the significant cost increases Dublin pubs have experienced over the course of the last year.
Six out of every 10 (60%) Dublin pubs say their energy bills have approximately doubled or more since this time last year. In fact 22% say their bills have approximately tripled in that timeframe. While a further 1 in 5 publicans say their energy costs are up by 50% since January 2022.
Half of Dublin publicans say their insurance costs have increased by approximately 20% or more, with 1 in every five pubs saying the increase has been 30% or higher.
All publicans say their drink supply costs are up by about 10% or more. While more than one third of Dublin publicans (35%) saying their food supply costs are up by 30% or more.
Just under half of all publicans (47%) say their average wage costs have risen by 20% or more in the last year.
6 out of 10 publicans (57%) say they have a negative outlook for the hospitality sector in 2023, while 43% say they are negative about the outlook for their own business for the year ahead.
Speaking about the survey results, Donall O’Keeffe, chief executive of the LVA said, “As this survey highlights the current outlook amongst the publicans of Dublin is downbeat . They have been experiencing a surge in cost increases over recent months covering a range of different areas, ranging from energy prices, insurance, to food and drink supplies. All of this is putting immense pressure on these businesses who are still recovering from the pandemic. When this is coupled with concerns about the upcoming licensing changes and serious interest rate hikes, it is obvious why there is a pessimistic attitude across the sector.
“The upcoming Government increase in the VAT rate is certainly adding to concerns, with 9 out of 10 publicans saying it will be detrimental to their businesses. This spike in the level of taxation will certainly have an immediate impact on the cost of eating out. When you consider that pubs account for the joint second highest portion of the Irish foodservice market* this seems like a damaging inflationary measure from the Government.
“We certainly believe that the VAT rate should be maintained at 9% for 2023. It does not make sense to anyone in hospitality for a 50% jump in the VAT rate to be introduced at a time of rising costs across the sector. VAT 9% is also the right rate from an international competitiveness perspective, which will be important ahead of the upcoming tourism season,” Mr. O’Keeffe concluded.
*Latest Bord Bia Irish Foodservice Market and Consumer Insights 2022 Report