TWO REPRESENTATIVE BODIES for hairdressers and restaurateurs have called on the Minister for Finance Michael McGrath to retain the current VAT rate of 9% in a move they would say would help keep their businesses afloat.
The Irish Hairdressers Federation joined with the Restaurants Association of Ireland, launched their campaign today in Dublin for the VAT rate to remain untouched for the remainder of the year.
Both groups had campaigned for the rate to be extended and later reviewed by the minister on 1 September, when it is expected to increase.
Value Added Tax, or VAT, is a tax added on top of any service or product that a consumer purchases, with few exceptions.
The standard rate, of 23%, is applied to most goods and services; however, the rate for the hospitality and tourism sector decreased from 13.5% to 9%, and has remained as such since November 2020.
The reduced rate was extended until 31 August 2023 under the cost of living supports announced in February 2023.
Now, both groups are campaigning for the rate to be maintained at 9% with President of the Irish Hairdressers Federation (IHF) Lisa Eccles claiming that an increase, on top of the challenges already faced by the businesses, would make the service “unaffordable” to consumers.
Eccles said that since Covid, salons have had to deal with increases in the cost of hairdressing products, they have also seen “enormous” hikes in energy bills as well as increases in the cost of minimum wage and the introduction of the sick pay scheme.
“For the Minister of Finance to now raise the VAT for people to have their hair done and go out to eat is going to become unaffordable,” Eccles said.
“Today we jointly call on the Minister for Finance to please do not to touch our VAT of 9%.”
Last week, the Irish Business and Employers Confederation (IBEC) the state’s largest lobby and business representative group, recommended that the government preserve the 9% VAT rate in Budget 2024 to tackle inflation and other growing costs.
CEO of Restaurants Association of Ireland Adrian Cummins said: “The Irish don’t want consumer taxes to be increased at this time when incomes are under so much pressure.”
He added that while the “vast majority of hospitality businesses” are small and turnover “modest” profit, an increase in the VAT rate could leave them with “no choice” but to pass that cost onto the consumer.
“The upcoming VAT increase and existing tax burdens place significant financial pressure on low-margin businesses, making it unsuitable to impose another consumer/inflationary tax on SMEs,” Cummins said.
The most recent Consumer Price Index, released by the Central Statistics Office (CSO) last week, revealed that prices for restaurants and hotels have increased by 6.6% in the last year – primarily due to increased costs for alcohol, food and hotel accommodation.
According to the CSO, hairdressing salons and other personal grooming businesses have seen a 4.9% increase in prices over the last 12 months, with cost of hairdressing alone increasing by 5.6%.
For example, the CSO said that the average price for a ladies’ wash, cut and blow dry in June 2022 was €47.87, which has since increased to €50.23.
In May, the Vintners’ Federation of Ireland – who represent pubs outside of Dublin – said the keeping the Vat rate at 9% was “crucial to the pub trade and the wider hospitality sector”.
The price of every drink in a bar has seen an increase, according to the latest consumer price index. John Clendennen, President of the VFI said in May that pubs face a “huge battle” to stay afloat and need the State to retain the 9% hospitality VAT rate and insurance reform.
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