LOBBY GROUPS REPRESENTING the hospitality industry have expressed disappointment that the reduced VAT rate for the sector will end next year.

The Minister for Finance Paschal Donohoe confirmed today that the 9% rate will finish – as planned – at the end of August 2022.

Tánaiste Leo Varadkar noted that the Employment Wage Subsidy scheme will run until the end of April 2022 but several hospitality groups expressed disappointment following the VAT news.

The Irish Hotels Federation called on the Government to extend the 9% rate until after 2025 in order to safeguard overseas tourism recovery and competitiveness.

Adrian Cummins of the Restaurants Association of Ireland said Budget 2022 was “disastrous” for the industry.

“This budget is a disaster for our members, restaurants, cafes and gastropubs, a vital element of our tourism offering.

“The VAT rate ending and wage supports tapering off will be the death nail in the coffin of many hospitality businesses this winter,” Cummins said.

“Although the supports offered in the budget are welcomed, there are still some long hard months ahead.

“Since lockdown measures and restrictions have been put in place, our industry has complied with the rules.

“Public safety and the safety of workers have always been at the top of our agenda. But this has meant serious financial difficulties for many.

“We needed the Government to help us fight for survival, today’s announcements fall short of that and we will need ongoing support to trade out of this,” Cummins concluded.

The Licensed Vintners Association (LVA) said the budget was generally positive for the hospitality sector but warned the VAT increase coming next September will be a serious problem.

“Overall this has been a generally positive Budget for the hospitality sector,” said Donall O’Keeffe, chief executive of the LVA.

“The extension of the rates waiver and the retention of the wage subsidy supports will provide some stability to businesses who have effectively been shuttered for most of the last 18 months and who are still operating with severe constraints in place.

“Looking ahead, we are concerned about the implications of the decision to increase the VAT rate from next September.

“That’s going to have a significant inflationary impact on hospitality costs from next autumn onwards, with the level of VAT charged effectively due to rise by 50%.”

Varadkar said the industry will benefit from the extension of the rates waiver, employment supports and the reduced rate staying in place until next August.

“The employment wage subsidy scheme will stay in place until April, so, we’ll be helping to pay the wages for most restaurants in the country until then.

“I appreciate they would like us to do more than that, but we do need to stay within the confines of what’s affordable,” he said.