Crucial to keep 9% VAT rate for restaurants in Budget

Tuesday 17 September 2013 14.50
Adrian Cummins said that tourism employment had risen by 9,000 since the 9% VAT rate was reduced in 2011
Adrian Cummins said that tourism employment had risen by 9,000 since the 9% VAT rate was reduced in 2011

The Restaurants Association of Ireland has said retention of the lower 9% VAT rate for the tourism industry in the Budget is crucial for the survival of restaurants nationwide.

Addressing the Oireachtas Committee on Jobs Enterprise and Innovation, the chief executive of the Restaurant Association said the restaurant industry employs 64,000 people.

This accounts for a quarter of tourism jobs, while the sector also contributes €2 billion to the Irish economy each year.

Adrian Cummins said that tourism employment had risen by 9,000 since the VAT rate was reduced in 2011, adding that retention of the lower rate would keep Ireland competitive as a tourist destination and sustain jobs in local communities.

He warned that tourism is one of the only industries creating employment in every corner of the country - and that if the 9% VAT rate is increased, jobs will be lost.

The Committee was told that Irish restaurant owners pay the highest catering wage rate in Europe, and that Ireland has the highest excuse duty on wines in Europe. He also noted that Irish food cost inputs are 18% above the European average.

Mr Cummins said that a fall in disposable income due to the recession was having a disproportionate effect on the sector.

He said there was now a three speed economy for restaurants - Dublin city centre restaurants are doing well, and are even seeing new openings; establishments in urban areas around the country are busy, but only on Thursday, Friday and Saturday nights while outside urban areas, restaurants and cafes are on life support. He stressed that the 9% VAT rate was their lifeline.

He also criticised the price of food, excise duty increases, rates, and regulatory burdens and called for ''helpful'' PRSI measures to be retained.