Shane McLave on Budget 19: VAT increase for hospitality industry ‘reckless’

The Restaurant’s Association of Ireland has called the Budget ‘thoughtless’, a sentiment that will be shared with many in the hospitality industry this week as they begin to do the sums on how the VAT increase to 13.5% will affect their business.

I, and Excel Recruitment, have always supported the campaign to KeepVatat9 and while expected, feel Tuesday ’s decision by the government was absolutely the wrong one. The Minister for Finance showed not only a lack of understanding on the difficulties faced by the industry- particularly rural and border area businesses but also complete disregard of the importance a buoyant tourism industry to the wider economy.

Budget 2019 was most certainly an election budget. While social housing and healthcare are hugely important and deserve as much funding as possible where these increases have come from have not been thought through- or fairly distributed, with employers being forced to pick up the bill. It’s not a case of business in general being hit. Most companies, including some of the country’s most profitable were unaffected by the Budget while landlords with hundreds, often thousands, of properties and few employees escaped any tax hikes at all.

‘These are the businesses that need to be protected- not placed under further pressure’

In contrast, small and medium businesses such as family-owned pubs, cafés and restaurants are going to take a big hit over the next year. These are actually the businesses that need to be protected- not placed under further pressure. Many are located in rural areas and are vital to employment and life in their local areas.

These businesses were also hit with the news that minimum wage will be increased to €9.80. It’s great that workers on minimum wage will receive an increase but on the flipside, employers are now facing an increase in VAT, an increase in minimum wage and increased employer’s PRSI. To add to the pain, both increase come into effect in January, typically the sector’s quietest month.

While the industry is far healthier than it was when the 9% rate was introduced, it still faces many challenges particularly with Brexit looming and still no idea of what the implications will be on our sector. The tourism industry has already weathered the storm of the recession and is one of our most important indigenous industry- supporting economies and creating jobs across the country. This decision is irresponsible and recklessly endangers one of the country’s biggest employers.