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A CROSS-PARTY ROW has started over election proposals to slash the 13.5% VAT rate for restaurant owners which has been at the centre of an ongoing crisis.
The food and hospitality sector has long-called for the 9% VAT rate – which was present during the Covid-19 pandemic – to be reinstated as they claim operating costs for produce, wages and energy bills have risen with inflation in recent years.
A spate of recent restaurant closures – some of which had high-profile owners or were popular with locals – led unions representing small and medium enterprises to protest last month, calling for the VAT rate to be slashed.
Fine Gael today announced its business policy plan which included an intention to slash the VAT rate to 11% for all firms in the food, hospitality, entertainment and hairdressing sector. Hotels would miss out on the reduction.
The promise makes up part of a €800 million support package on offered by the party, which would include a retail crime strategy, SME test schemes and a promise to deliver 300,000 new jobs while attracting more foreign direct investment.
Taoiseach Simon Harris promised that the supports would be felt by businesses within the first 100 days of a Fine Gael government.
Fine Gael’s plan was immediately undercut today by the Social Democrats, proposing that the food and accommodation hospitality sector must be split and that a 9% VAT rate be applied for restaurants.
Leader Holly Cairns said this proposal would make for a more targeted scheme for SMEs, such as small cafés, but added that it would be an emergency measure.
Tánaiste Micheál Martin, who was out canvassing in Douglas, County Cork today, said that while he is in favour of VAT reform, lowering the rate to 11% could inadvertently trigger higher VAT rates on energy, which he said would only drive up costs for Irish householders through higher gas and electricity prices.
However, he said he was not ruling anything out as it will provide a 300 million euro support fund for businesses and a 1.5% reduction in the PRSI for employers who have staff on the minimum wage.
Speaking on RTÉ Radio One’s Saturday with Colm Ó Mongáin programme, Finance minister and Fianna Fáil Dublin West candidate Jack Chambers said that any slash to the VAT rate would increase bills.
Chambers explained a VAT reduction to 11% had been considered during budget negotiations this year but it was found that rates on gas and electricity bills would increase to 11% as a result.
He said his party will be committing to a five-year freeze on VAT rates for bills at 9% for food businesses instead, which he claimed would take a significant burden away from owners. He added that it would be funding within the overall fiscal framework.
Chambers said:
“We could not do that if we implemented the Fine Gael proposal of an 11% rate, because essentially, Fine Gael want to increase the vast rate and gas and electricity in their proposal.”
Sinn Féin TD for Donegal and party spokesperson for finance Pearse Doherty challenged Fianna Fáil’s plan, claiming that Fianna Fáil had legislated in the latest finance bill to increase the rate by 3.5%.
Fine Gael’s plan to increase VAT rates to 11% would also increase rates on to gyms, swimming pools and leisure centres which, in turn, would increase membership costs.
A party spokesperson told The Journal that a €50 tax credit would offset the effect for members. Chambers today that increasing tax on gym membership is “completely regressive” and that Fine Gael’s proposal is a “serious mistake”.
He claimed the tax would impact young people and many people who value their gym membership.
Sinn Féin leader Mary Lou McDonald, speaking to reporters in Waterford, echoed these concerns.
She claimed that the 11% rate would have “an adverse consequence” for those who currently have a 9% rate, such as newspapers, gyms and “bouncy castle hirings – it may be niche, but it matters”.
“This is nonsense, to be honest. I think it’s policy making on the back of an envelope.”
McDonald highlighted that Sinn Féin has proposed that rates be cut to 9% and that it was rejected by government last week.
The Department of Finance has also said that any rate change would be “unjustified” and too expensive to maintain.
Labour Party senator and candidate for Dublin Central Marie Sherlock criticised Fine Gael’s plan, claiming that if the party really wanted to cut the rates to 11% it would’ve done so during at Budget 2025.
“It’s next May, when they’re proposing to bring it in, which is cold comfort to a lot of those small businesses out there,” she said, adding that any plan to reduce the rate would only go onto improve the situation for larger businesses, such as hotel chains.
“We need to actually resolve the problem,” Sherlock added. “A lot of these businesses, operate out of premises that that are energy inefficient. So we need to actually put a retrofitting program and in place.”
Speaking on the same programme, People Before Profit councillor and candidate for Dublin South-Central Hazel De Nortúin said that any plan must focus on cutting employee’s tax rates.
While De Nortúin is supportive of cutting the VAT rate, People Before Profit prefer reducing the rate of USC paid by employees to “put that money straight into the pocket of the employees”.
She said that she had “no problem” with proposals to cut VAT rates for employers, but argued that it needed to be met with an increase in the minimum wage. She added that her party would prefer if rates were cut for SMEs and increased for larger multinationals.
McDonald said that Fine Gael’s proposals were “extraordinary”, claiming that the 11% rate “simply won’t cut it” and that companies who are at risk will not be targeted.
“Our proposals is to reduce the VAT rate to 9% for hospitality and for hairdressers. And to keep it at that rate,” she said, adding that Fine Gael’s proposal demonstrates that they “messed things up”.
“The consequences of this have been very, very serious. And this is just a very rushed attempted now to cover their tracks,” she added.
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I don’t smoke, but will the minimum age to join the armed forces raise to 21? If you’re old enough to take up arms and die serving your country, then you’re old enough to smoke and drink, no matter how bad of a decision is. You can buy a house and get a mortgage at 18, you’re a tried as an adult when you’re 18. This legislation is wrong
@J Ven: Tobacco is a dangerous drug with zero redeeming qualities & you equate such an activity with serving one’s country, marriage, buying a house etc?
@J Ven: You can’t drive a bus until you’re 21, certain motorbikes until you’re 24. There are different age restrictions on different things. Who’d have thought it, eh?
@Patrice Ahern: What redeeming qualities does alcohol have?
@Ger Whelan: Wine adds wonderful flavour to foods.
Alcohol, in general, is a social lubricant.
@J Ven: Good luck getting a mortgage at 18
@Patrice Ahern: Sorry, but “J Ven” is absolutely right.
You can be in army, trained and potentially kill someone in combat, making the decision to shoot and kill, but cannot buy a pack of cigarettes?
That’s not smart, is it?
And yes, I also equate the maturity required to save Ireland in the army to be able to make the decision to smoke or not to smoke.
If you have the power to kill someone else = you NEED to have the power to decide if something can (legally) kill you.
In this case, either you’re 100% an adult and allowed to make to make your choices or you’re not.
@J Ven: it’s trying to stop people from taking it up.
@J Ven: you pay adult prices in a hotel and ur only 15
@Wolfgang Bonow: “to serve Ireland”. Let’s hope it won’t come to save Ireland :-)
@J Ven: Unfortunately, they don’t die for their countries , they die due to incredible greed!
@J Ven: Sometimes, people have to be protected from themselves. It’s our taxes which have to be used to keep these foolish people on ventilators and cancer hospitals when they have destroyed their lungs
Should include vapes
@Ian McDonald: Really shouldn’t. They are a life saver for people quitting smoking. 4500 annual deaths from smoking. Vapes on market almost 20 years. No fatalities. People smoke for the nicotine but die from the tar.
@NoelDublin: If people are too young to buy cigarettes, then they’re hardly using vapes to wean themselves off a lifetime addiction, are they?
@Stephen Brennan: still dangerous kid’s as young as 12 smoking them dangerous and adictive
@NoelDublin: wait till statistics for vapes are eventually released,they were originally meant to get people off cigarettes and nicotine not a replacement
@NoelDublin: There have been a very small number of fatalities reported for vapes but it’s literally one or two in much larger countries.
They are however highly addictive but addiction with no other issues is not really a big problem. Half the country is addicted to tea after all.
@Stephen Brennan: Heroin and cocaine are already illegal.
@Karen Marten: dangerous based on what? Decades of vaping, decades of studies, vaping is a safe alternative to smoking and has brought millions away from deadly tobacco.
Don’t smoke but if u can marryv and vote at 18 why can’t u decide to smoke if one wants…gov. just wants to be first and leading the way on this ” important” issue…sure housing , employment issues and more not so pressing…I think not…
@Padraig Devaney: No such thing as housing crisis.
@Alex: there’s probably isn’t as there’s no houses available….
@Padraig Devaney: Marrying and voting is not a public health issue (insert poor joke here), so it’s not the same at all. You cannot safely smoke cigarettes (second-hand smoke issues aside).
@Alex: yes their is
@Padraig Devaney: There is an argument from a healthcare cost point of view to try something. As someone who has smoked through the value of a new car, I wish the age was 21 when I was a teenager.
This government has no mandate vast majority of people want a change we are the most expensive for everything we need yet all they can think of is bringing in more legislation that’s not required they should get on with solving the real issues housing ,hospitals, illegal migration policing or lack of same
@Derek Collins: the vast majority of people voted for government parties in the recent local and European elections. So how can you be sure they want a change?
@Ger Whelan:
Ger,
The government parties all lost seats in the elections I won’t mention the referendums I’m not a right winger or left swinger I’m a 70 year old that can’t believe how gullible Irish voter’s are this is just more smoke and mirrors excuse the pun but he’d be better looking after his portfolio and sort out the overcrowding in our hospital’s and turn the key on the children’s hospital.
@Derek Collins: the Dail was elected to serve a term of no more than 5 years. Thats the mandate.
@Derek Collins: It’s not an either/or thing. This costs nothing to implement and should bring health benefits.
Sorting out the hospital overcrowding will take time, money and proper planning. We need more of everything in hospitals, staff, beds, equipment, space …
As for the children’s hospital that needed good planning and management a long time ago and has had neither. Now all that seems possible is to throw money at it until it’s done.
@Paul C: @Paul C: There is no such thing as a mandate.
That is a contrivance of political parties to pretend they have the support to do things the people do not want them to do.
This is a very good idea. It won’t affect those currently allowed smoke, all it does is make it harder for young nonsmokers to take up the habit in the first place.b
@Stephen Brennan: Good luck with what?
@Stephen Brennan: Young people are much more inclined to take up vaping. A 15 or 16 year old won’t even see the attraction to smoking when the only people they see smoking are aulde wans.
@Stephen Brennan: They see their peers and those slightly older drinking so they see an appeal. In 20 years the only ones smoking would be 40+. Not quite as cool looking. And if they’re looking at buying something illegal, I suspect there’s better options than cigarettes.
@Stephen Brennan: that’s a different argument as we have different age limits for different things.
Government should mind there own business
Makes sense. Phase it out. More money in the average persons purse. Hard to argue with it.
For the young, they will know no different as less will smoke in 5/10 years.
Pity they wouldnt put a set date on the ban and anyone younger than that date will never be legal allowed purchase. A date would completely phase it out.
@Stephen Brennan: It will lower numbers and let the Gardai sort out the criminals. Don’t let perfect be the enemy of good.
@Stephen Brennan: It’s not a cliff edge ban, it’ll be a gradual thing that in a generation should bring about a huge change. There wouldn’t even be a demand for black market supply.
@Stephen Brennan: Of course prohibition doesn’t work. This is a phase out strategy. If it was a direct ban, it would be different but try and picture the scenario in 20 years.
@Stephen Brennan: Granted, it’s not quite as good as the phasing out version that was going to be introduced in New Zealand. I’d be hoping that’d be the next step.
@Stephen Brennan: It was scrapped because the government didn’t want to lose out financially in the short term.
@Paddy Russell: The fact is by 2028 hardly anyone under 21 will smoke or be tempted to, in fact hardly anyone under 25 will. This has been the trend in the US and now New Zealand since vapes became available. Sweden has hardly any under 25′s smoking, the availability of smoke-free alternatives makes smoking absolute.
The problem with a ban on cigarettes is it creates an illicit market, look at how well the prohibition of cannabas worked.
Grow up Ireland and make your own choices once over 18 years old, granny state
While Ireland is still struggling to bring down smoking rates, Sweden is about to become the first smoke free country. They’ve done this by embracing harm reduction. I don’t understand why Ireland doesn’t take this fatal issue seriously and follow Sweden. https://smokefreesweden.org/
@NoelDublin: taxes
Pure optics, buy your duty free cigs on henry st and moore st in dublin and you can be 13 years of age.
@Mr “JonnieBoy” Johnson: Yea, I can just see the kids from all across the country making for Henry Street every few days.
@ItWasLikeThatWhenIGotHere: same in all cities and towns, moore st dubillin being a mere example
@Mr “JonnieBoy” Johnson: You haven’t got to see much of Ireland, have you?
Anyone else remember the little corner shops that would sell 5 to anyone, any age?
Ah the, cough cough, memories.
@Paddy Whelan: Do you remember Sweet Cigarettes?
Little packs of cigarette shaped sweets for little kids.
They even had a red end, to simulate a lit cigarette.
But if it was an increase in price it would take effect at 12 o clock tonight without fail rest assured of that.
Does anyone seriously believe that retailers of tobacco products are going to enforce this legislation by asking adults for proof of their age?
@William Tallon: In Seattle weed shops they do every time because theirs a camera and the police and licensing authority can and do check on them and will shut them down for infractions.
@Steve O’Hara-Smith: I can’t see that happening in my local Centra if someone who might be slightly underage is just looking to buy 20 Johnny Blue, though, or the Guards being particularly bothered over infractions…
@William Tallon: It would have to be a mandatory condition of the license to sell tobacco products. Just like the closed cabinet instead of open shelves.
As for the Guards not being bothered, one complaint that little Johnny bought some fags, a quick check of the video (by Guards or licensing authority) and license revoked. Backed up by random checks. No retailer is going to risk their licence to print money by being a dealer in addictive drugs.
Compliance would be fast and complete.
@Steve O’Hara-Smith: Good luck to any government trying to introduce those types of mandatory conditions/random checks here, especially given that we’re talking about tobacco and not weed! This is Ireland, not the U S. It’s not going to happen…
@William Tallon: Most likely shops stop selling tobacco altogether. All those licensing issues are pretty standard. No doubt it it’s the franchise owner they ‘enforce’ this legislation through tho, would doubt our lot have the spine for Centra or Circle K.
What about Vapes. Why not them.
@Stephen Brennan: they are still addictive and no one knows yet what damage they are doing
@Margaret Deacon: Lots of things are harmful and addictive. This relates to tobacco products.
@Stephen Brennan: Vapes contain nicotine.
A highly addictive and poisonous drug.
@Stephen Brennan: Source for the claim that nicotine is no more dangerous than caffeine, Stephen?
@ItWasLikeThatWhenIGotHere: So do tomatoes and potatoes and aborigines. Poison is in the dose.
@ItWasLikeThatWhenIGotHere:
https://www.rsph.org.uk/about-us/news/nicotine–no-more-harmful-to-health-than-caffeine-.html
Good news.
One thing that confuses me is how people can call for the decriminalisation of harder drugs along with regulation and taxation while simultaneously calling for the criminalisation of tobacco, allowing criminal enterprises the opportunity to step in. I understand both pro- and anti-regulation arguments, but it seems odd to me to think just doing the opposite of what we do now will sort out both problems.
The file image is so dated, haven’t seen those colourful boxes in a while
This was reported a while back, quiet day at the office!
@Brian Hunt: Says the man leaving comments on The Journal! What was reported recently was the law itself, the enactment date was only announced yesterday.
We need to stop treating young people as kids. This is nonsense.
The pure drivel coming from the sheep in this comments section is embarrassing.
This is a bs law that will change nothing.
They just want to be seen to be doing something. I wouldn’t blame a snake for being a snake but you people really shock me every time.
Should be done straight away or banned even better,
have your say