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File photo: Photocall Ireland
Budget 2014

Noonan: VAT rate for restaurants likely to rise

The Finance Minister said the reduction of the 13.5 per cent rate for the hospitality sector had always been a short-term “pump priming” measure.

FINANCE MINISTER MICHAEL Noonan has indicated that the nine per cent rate in VAT for the hospitality sector is likely to be increased in the upcoming Budget.

The tax was reduced from 13.5 per cent in 2011 in a bid to kick-start the sector, and lobby groups have been piling pressure on the Government in recent weeks to have the lower rate retained.

However, speaking in Limerick today, Minister Noonan said the measure had always been planned as a “pump priming exercise” which was intended to be temporary. He added:

The people in the Department of Finance and in Revenue have built its restoration into the Budget.

In very simple language if I don’t bring it back I have to find something like €360 million elsewhere.

The Restaurants Association of Ireland launched a campaign earlier this month insisting the rate needed to be kept low in 2014 “and beyond in order for the Irish economy to remain competitive”.

The representative group said that employment in the restaurant and tourism sector had increased by around 9,000 since the cut was brought in.

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