The new draft programme for government includes plans to cut the VAT rate to 9% for food services, entertainment and hairdressing in the next budget.
Adrian Cummins, chief executive of the Restaurants Association of Ireland, said the reported reinstatement of the 9% VAT rate is greatly welcomed.
"This marks a significant victory for small, independent restaurants, pubs, cafés and other hospitality businesses which, in total, employ 270,000 nationwide," Mr Cummins said.
He said his thoughts today were also with those business owners that were forced to make the heartbreaking decision to close due to rising, uncontrollable costs in recent times.
"It is now critical that the Government takes every step to prevent further closures of SMEs in the hospitality sector - the heart and soul of every town, village and city across the country - between now and October's Budget," Adrian Cummins said.
"This includes instructing the Revenue Commissioners to exercise necessary, meaningful leniency on warehoused or current tax liabilities," he said.
"While global economic headwinds may see the level of foreign direct investment and the number of American MNCs in Ireland tighten in the years to come, the reinstatement of the 9% VAT rate will ensure the resilience of local employment, Ireland's high streets and our Cead Míle Fáilte," he added.
Meanwhile, Supermac's Managing Director Pat McDonagh also welcomed the promise to reintroduce the 9% VAT Rate for the hospitality sector.
Pat McDonagh said the promise was a "fantastic result" for the hospitality and food businesses in the country.
"This is a common-sense decision that will save jobs and livelihoods & help give the tourism sector a much-needed boost following a number of difficult and challenging years," he said.
But he said the industry needs the VAT rate reduction to be introduced as soon as possible and not wait until the end of the year for the budget as a lot of businesses will be lost between now and then.
"The future of hundreds of small businesses will depend on decisions made by the upcoming Government and that these decisions will have long term repercussions for the country," he said.
"The industry is struggling to deal with increases in operating costs linked to changes in energy costs, increased material and product costs, insurance premiums and employment law," he added.
