The Vintners Federation of Ireland (VFI) has expressed severe disappointment following the Government’s decision to increase the Hospitality VAT rate from 9% to 13.5%, effective from 1st September.
A Blow to Struggling Pubs
The increase comes as a blow to publicans who have been grappling with rising costs in various sectors including energy, labour, and food and drink. The VFI asserts that the decision is essentially a tax on the consumer and arrives at a precarious moment when many pubs are facing operational challenges.
Impact on Food-Serving Pubs
The special 9% VAT rate had been a crucial support for pubs serving food, offering some relief from skyrocketing operating costs. VFI President John Clendennen states:
“The government acknowledged the impact by extending the hospitality VAT rate last February for another six months. But instead of offering further relief, the new increase threatens to undermine the trade, especially as a quieter autumn trading period looms.”
“The economics of the situation have only worsened since the government’s extension in February. This move to increase VAT to 13.5% will negatively affect both businesses and consumers alike. Customers are already contending with a rising cost of living, and this increase will exacerbate those pressures,” warns Clendennen.
Long-term Viability Concerns
The VFI emphasises that this decision casts a shadow over the long-term viability of many establishments. Pubs are an integral part of Ireland’s social fabric and contribute significantly to the economy. Yet, many are questioning their ability to stay in business amidst the rising costs and now the increased VAT rate.
For publicans and patrons alike, the Government’s decision raises pertinent questions about the sustainability of Ireland’s much-cherished pub culture.