Tipperary council writes to Finance Minister appealing for U-turn on hospitality sector VAT hike

Tipperary County Council’s elected members have decided to write to Minister for Finance Michael McGrath calling for the 13.5% VAT rate imposed on food related businesses to revert to 9% until the end of 2024.

The Government’s increase of the VAT rate from 9% to 13.5% from September 1 for food related businesses and some other services like hairdressers and barbers was roundly criticised by councillors at the council’s September meeting in Nenagh.

Councillors warned its impact will be to place further pressure on the county’s tourism and hospitality businesses that are only slowly recovering from the huge disruption of the Covid pandemic and further fuel inflation.

Two identical motions calling on Tipperary County Council to support the re-introduction of the 9% VAT for food related businesses and to call on the Minister for Finance to extend the 9% VAT rate until the end of 2024 were tabled and approved.

One motion was tabled by five Fine Gael councillors Declan Burgess, Mary Hanna Hourigan, Mark Fitzgerald, Marie Murphy, Peggy Ryan and Independent Cllr Kevin O'Meara.

The other was tabled by eight Fianna Fáil councillors including Siobhán Ambrose, Micheál Anglim, John Carroll, Imelda Goldsboro, Seamus Hanafin, Roger Kennedy, Sean Ryan and Micheál Smith.

Several of the councillors who addressed the council meeting in support of the motion work in the hospitality and tourism sector.

Proposing the Fine Gael led motion, Cllr Declan Burgess, Cathaoirleach of Tipperary/Cahir/Cashel MD, said as they approach the Government’s 2024 Budget it was important that Tipperary County Council endorses this campaign to restore the 9% VAT rate and write to the Finance Minister seeking a reduction of the tax back to this level.

He pointed out that Ireland now has the second highest hospitality tax after Denmark in the EU.

“This is a vast sector that contributes massively to our economy. Before the pandemic, it was worth €5.6bn and generated €1.8bn revenue for the Government.”

As someone working in the hospitality sector, he said it was quite frustrating that at one level the Government was saying it wouldn’t add to the cost of living but this VAT rate increase certainly added to inflation.

“It’s also worth noting that since Covid the recovery for the hospitality section has been slower than other sectors. I don’t think the sector is robust enought to absorb this new VAT rate.”

Cllr Burgess also noted that the VAT hike also affected barbers and hairdressers and warned there will be significant job losses if it remains at 13.5%.

Fellow Fine Gael Cllr Mark Fizgerald, proprietor of The Thatch Pub in Cloneen, said he was affected by the VAT hike and also knew a lot of people affected by it including his partner who was a weddings event co-ordinator.

She reported to him that the VAT hike had been an “absolute nightmare” as hotels were increasing their food costs in response to it and they had to go back to couples and inform them of this. He had spoken to a number of couples due to get married and this tax increase has brought an extra cost on their already tight budgets.

Another Fine Gael Cllr Phyll Bugler, who runs a B&B in Ballina, said tourism and hospitality businesses had terrible, very tough years during the pandemic and people didn’t realise the amount of changes and investment they had to make. Alongside this energy costs were very high this year and last year.

“Putting it back up is very hard. A lot of people have found it so tough they have got out of the B&B business,” she said.

Fianna Fáil Cllr Sean Ryan also spoke out about the impact of the tax increase on struggling local businesses ranging from hairdressers to chip shops. He noted that a lot of the over charging consumers complained about took place in Dublin and not this county.

But Independent Cllr Annemarie Ryan, co-proprietor of the French Quarter Restaurant in Tipperary Town, said she understood the good intentions of those who tabled the motions but she felt it was futile as the VAT rate hike has already been implemented by the Government.

She said she was frustrated by this tax increase. She couldn’t increase her prices and had to carry the extra cost somehow but it was going to be very difficult.

Fine Gael Cllr Peggy Ryan, however, disagreed and argued that councillors wanted to make a point to the Government through this motion to reduce the VAT rate.

Sinn Féin Cllr David Dunne said he also supported the motion. The Government parties had the power to reverse this VAT rate hike and he called on them to do that.