The Restaurants Association of Ireland has warned that the increased VAT rate from 9% to 13% is "nonsensical" and will close the doors on many low-margin restaurants, cafes and food led pubs across the state.
Consumer Inflation
The Association said the move will add to consumer inflation at a time when government said it would not add to the cost of living.
Furthermore, the group said the increase will move Ireland to the second highest hospitality VAT rate within the EU and it will erode Irelands competitiveness as a tourist destination.
'Final Nail In The Coffin'
“The increase is wrong at a time when the country needs to reduce inflation, a VAT increase only adds to inflation," said Adrian Cummins, chief executive of the Restaurants Association of Ireland.
"Government need to restore the 9% VAT for food related hospitality businesses in Budget 2024 and we will be making the case for this when we meet with the minister for finance next week."
"The increase of the VAT rate is the final nail in the coffin for many small cafes, restaurants and food-led pubs.”
'Negligible'
At the beginning of the month, the Restaurants Association of Ireland (RAI) said it believed Ireland should retain the hospitality sector's reduced VAT rate but only for food-related businesses.
Cummins said poor weather and rising energy and ingredient costs, were among the reasons why restaurateurs feel their businesses have struggled this summer.
He noted that the rising cost of operating a business in Ireland meant that any boost to restaurants’ revenue this summer has been "negligible."
