Minister for Enterprise, Tourism and Employment Peter Burke has defended the Government's decision to cut the rate of VAT for the food-led hospitality sector.
The move to reduce the rate from 13.5% to 9% from 1 July next year will also benefit the hairdressing sector.
Minister Burke said the decision was taken "to inject viability" into hospitality businesses and was evidence based.
He said there was a 4.2% drop in full-time employment in the hospitality sector in the last quarter, which he said was "about 1.9% behind the national growth in our economy, and that really points to it being under significant pressure".
Minister Burke also said there has been a 60% increase in liquidations over the last year in the hospitality sector.
He said many of the businesses in hospitality "are not making money" and he added that "many are on the brink" and "under pressure because of regulatory increases."
"This will give them a very strong lifeline," he added.
Responding to criticism of the budgetary measure, he said the policy takes up 17% of the tax package, which he said is "not really a big massive chunk".
Asked if the businesses who will benefit from the rate cut should pass it on to customers or in wage increases, the Enterprise Minister said the measure was "a viability mechanism."
"People can argue, can you have affordability and viability together. It is very difficult. But what I've said is that people have to offer value to a sector for consumers," he said.
"Because obviously, if people aren't getting value, they're not going to a restaurant, they're not going to a coffee shop. It's difficult to have viability and affordability together but business owners have to provide value for their customers," he added.
The Minister said the Government is "trying to put viability into businesses", but he said it's up to businesses "what price they charge, what profit level they have in their business, and what allows them to grow."
"That's up to independent retailers but from government's perspective, this is about jobs growth. It's about enhancing our tourism offering, which is very important," he stated.
Asked why large fast food multi-nationals were not excluded from the rate cut, Minister Burke said Ireland is governed by the EU VAT framing directive, which he said must be adhered to and "is very clear that you can't discriminate between clients under a tax code, so that's very black and white."
"So, there was never a case whereby you could differentiate by that law on the basis of turnover or size of premises," he added.
He also said many of the large fast food multi-nationals those businesses are employing people right across the country.
The Licensed Vintners Association and the Vintners Federation of Ireland, while welcoming the VAT rate cut, have both hit out at the decision not to reduce excise duty on alcohol, which the representative groups say is among the highest in Europe.
Minister Burke described the call for reduction in the levy as "a well merited proposal" and he said it was "something that we were supporting."
"Like everything, as we go through the budgetary process, you don't win every single battle," he added.
"It's one of those issues that you're always going to never get every single thing right and this is one budget of five, I would say," he stated.
