A WEST Cork publican has described as ‘absolute madness’ government plans to increase the tourism vat rate to 13% next month.
A rise in the rate from 9% could put serious pressure on local businesses and jobs, according to those working in the sector. The hospitality industry has once more expressed huge concern about the effect of a potential €400m increase in vat on Irish consumers and tourists.
If implemented, the proposed 13.5% rate would see Ireland with the third highest tourism vat rate in Europe. The current 9% is due to end on February 28th with an increase currently under consideration by the government.
Fergus O’Mahony of Mary Ann’s Bar & Restaurant in Castletownshend – who just opened last weekend for its 41st season – said any plan to increase the tourism vat rate from 9% to 13% is ‘absolute madness’. He said he and people in the tourism industry need the rate to remain at 9%, especially during the cost-of-living crisis.
‘A lot of our colleagues are still recovering from Covid and are only open a couple of days a week, so to put up the rate is absolute madness,’ he said. ‘It will save a lot of jobs if they decide to maintain it at the current rate.’
David Henry, general manager of the Clonakilty Park Hotel, said it was ‘vitally important’ that the rate is kept at 9% so it doesn’t disadvantage hotels, restaurants and accommodation venues.
‘But it’s important, too, that businesses like hotels maintain their profit margins so that we can actually function as a business. If the rate goes up to 13%, that’s a 50% increase in payments to the government and that will close a lot of businesses. ‘It’s off the bottom line and price increases are saturated already, so we can’t increase them any more,’ said David. ‘We’re not like the Dublin hotels who have business all year around. Small businesses like ourselves are getting hit right, left and centre with wage increases, delivery costs and supplies going up – we can’t take anymore.’
He said the ‘hierarchy’ in the government have tarred all hoteliers with the one brush over reports that some Dublin hotels engaged in price-gouging last year. ‘They’ve put us all in the naughty corner due to the action of less than 5% of the business,’ he said.
David also pointed out that if hotels and restaurants aren’t making a profit, they will be unable to re-invest. ‘This increase will 100% lead to job losses in the hospitality industry and if they can’t pass the increase onto customers, the biggest overhead is staff. If they still can’t make it viable, businesses will close down.’
Cork South West Independent TD Michael Collins called on the government to put an end to this ‘interminable Oliver Twist scenario’ where the Irish people come to them with the begging bowl before they give them ‘some more’.
On Wednesday afternoon, a number of West Cork hoteliers joined a zoom call with Minister for Finance Michael McGrath, to plead for a retention of the current rate.
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