The Vintners Federation of Ireland (VFI) has strongly criticised a decision by the government to increase the hospitality VAT rate from 9% to 13.5%, which was enforced at the beginning of the month, and have labelled it 'a tax on the consumer.'
The association claimed that for pubs serving food, the 9% VAT rate was a 'crucial intervention,' at a time when the cost of doing business continues to increase.
The VFI also noted that publicans have faced price increases across the board from energy to labour alongside food and drink, ever since Covid restrictions were removed.
Decimated Margins
“The decision to increase the VAT rate for hospitality is effectively a tax on the consumer and comes at a time when publicans are dealing with rampant inflation that has decimated margins and seen some pubs go out of business," said VFI President John Clendennen last week.
“The government acknowledged that fact by extending the hospitality VAT rate last February for another six months but the basic economics of the situation have only worsened since then."
"The special VAT rate was a vital intervention that allowed pubs serving food some respite from the soaring cost of doing business."
Summer Season Ends
Clendennen further argued that increasing VAT to 13.5% will negatively impact the trade as the summer season ends and a quieter autumn trading period arrives.
"Customers are already feeling the pinch with cost of living increases so this is a short-sighted move by government that will lead to concerns about long-term viability," said Clendennen.
