Tag: keep VAT at 9%

Shane Mclave General Manager

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

Posted on | by Aisling Rafferty

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.

Shane Mclave General Manager

Budget 2019: Why Brexit is only one reason VAT at 9% must be saved

Posted on | by Aisling Rafferty

With the Budget looming, General Manager Shane Mclave offers his analysis on what this Budget, Brexit and the question mark over 9% VAT could mean for the hospitality industry

It’s the same story every year, as the hospitality industry winds down from a hectic summer season, attention turns to October’s Budget announcement and the debate around the industry’s 9% VAT rate begins again.

So will the 9% rate be kept this year or will it return to the rate of 13.5%, which was last in effect in 2011? The speculation is rampant again this year with no indications as yet from the Department of Finance as Budget Day draws nearer.Many commentators like to discuss the ‘cost’ to the Exchequer but this is an inaccurate analysis of a much bigger picture and completely ignores how beneficial the VAT rate has actually been. According to the Revenue’s own figures, in 2012, the first full year of the 9% VAT rate, income to the Exchequer was €630m from the tourist industry. This figure is anticipated to reach 1.04bn as a result of the increased activity in the sector. The 9% tourism VAT rate has been fantastic help to the Exchequer, not a hindrance.

Since the introduction of the 9% rate, the tourism industry – hotels, attractions, restaurants, B&Bs, caravan and camping sites, activity providers and many others, have created thousands of jobs. Recent figures from the Irish Tourism Industry Confederation (ITIC) show a staggering 79,100 jobs have been created in the tourism and hospitality sector since 2011.

68% of those new jobs are outside of Dublin, a feat no other industry can come close to achieving. Tourism and jobs it creates, particularly in the regions, must be supported and nurtured.

The ITIC has set ambitious goals for the industry, such as growing overseas earnings by 65%. This is only possible with government support… and the retention of the 9% rate. Any further increases in costs will achieve nothing other than stifling demand and damage one of the country’s biggest employers. Now is not the time to meddle with a successful formula that has worked so well and has so much more to offer. With unemployment so low and the minimum wage set to increase further, salaries and wages are increasing meaning the industry is facing mounting labour costs in the coming years. Now, is the exact wrong time to place further financial pressure on the industry.

What many seem to forget is that the 9% rate is not that unusual and actually brings Ireland’s tourism industry in line with the rest of Europe. 16 of 19 eurozone countries have tourism VAT rates of 10pc or less, making Ireland fully competitive with other European cities. This point can’t be stressed enough considering we still don’t know what Brexit will look like. No matter how hard or soft it is, Brexit will have an effect on Irish tourism, a fact the government must keep in mind. Irish tourism is uniquely exposed to Brexit with 40pc of all international visitors coming from Britain.

The VAT rate has enabled Ireland’s hospitality industry to do fantastic things- attracting more tourists, grow across the country and employ thousands of people. For all these reasons and so much more, Keeping Vat at 9% is an absolute must.

VAT 9%

Excel Recruitment supports keep VAT at 9%

Posted on | by Aisling Rafferty

Ireland’s 9% VAT rate for the hospitality industry entered the news again this month as arguments in favour of scrapping the 9 per cent rate circulating around the Department of Finance ahead of the upcoming Budget.

Excel Recruitment work with and on behalf of some of the most well-known and best-loved names in hospitality nationwide and have always been a huge advocate of a 9% rate for the hospitality industry. It is crucial that these companies continue to be supported in their work, providing jobs throughout the country and contributing massively to one of the country’s most important sectors. The rate was one of the few saving graces for hard-pressed hotel and restaurant operators during the recession. Despite being out of the recession, the hospitality industry still faces many challenges including spiralling commercial rates and the uncertainty of Brexit. Add to this the incoming increase in minimum wage in January, which will further increase costs to businesses’ and the growing trend of rising rates in order to retain talent amid a continuing chef crisis. Some parts of the sector are now experiencing improved trading conditions in line with the economic recovery but this is not universal and many businesses are still under significant pressure.

In terms of tourism, the 9% rate is crucial for Ireland to remain a desirable destination and competitive within Europe. Chief Executive of the Restaurants Association of Ireland (RAI), Adrian Cummins, said “Seventeen out of 19 Eurozone countries have a VAT rate of below 10%. A 9% VAT rate in Ireland is not only the correct rate for our country, but it is also in line with the rest of Europe. We need this VAT rate particularly now as Brexit negotiations begin, to remain competitive”.

Minister for Finance Paschal Donohue has signalled the rate will stay (Irish Times, July 2017) but nothing is official until the budget is announced in October. Until then those that work in, for and with the hospitality must be vocal about its importance and its need to stay.

While increasing the VAT rate may provide a short-term injection of cash to the Exchequer, piling additional bills on to already pressured businesses’. It would have serious negative effects on many businesses’ ability to operate and will lead to the loss of jobs and the closure of many quality hospitality operations all over the country. The VAT rate has enabled Ireland’s hospitality industry to do fantastic things – attracting more tourists, grow across the country and employ thousands of people. For all these reasons and so much more, keeping VAT at 9% is an absolute must.