Carol Nolan TD

A tsunami of small business closures will occur if 13.5% VAT rate remains unchanged


Independent TD Carol Nolan has warned Government that unless it takes immediate steps to reduce the current 13.5% VAT rate applicable to the hospitality, tourism and retail sector it can expect ‘rolling closures across all sectors’ until such time as the lower rate of 9% is introduced.

Deputy Nolan was speaking after she her Rural Independent Group colleagues called for an immediate reduction in the VAT rate during a private members motion debate on the matter:

“It is unclear to me just how many times a sector has to sound the alarm before it is taken seriously by Government. Time and time again those within hospitality, tourism and retail have emphatically made the point that they are facing imminent and widespread closures caused in large part by the reintroduction of the 13.5% VAT rate,” said Deputy Nolan.

“This is not a hollow threat or anything resembling scaremongering. Indeed, we know from a Survey of Restaurant Association of Ireland (RAI) members last week that a staggering 86.7% say the 13.5% VAT is greatest threat to their viability.”

“73.9% say their business will be closed this time next year if the 9% rate does not return and 67.2% say they would have already closed their business if it were not for the ongoing VAT9 lobbying campaign.”

“This is a real crisis that is being immeasurably worse by the stubborn and frankly incomprehensible unwillingness of government to address the key issue. I do not understand what the rationale behind the refusal actually is.”

“We know that government has initiated several measures to support businesses and that is certainly welcome. But it is a bit like giving a patient something for its headache while leaving his broken legs untreated.”

“Indeed, I know from PQs I have submitted to the Minister for Enterprise; Trade and Employment there have been 957 submissions from small and medium sized businesses owners in Offaly to the Government’s Increased Cost of Business (ICOB) portal. The total number of properties involved is 1,068 while there has been an almost equivalent number for Laois.”

This highlights the ongoing economic shocks being felt by retailers and small businesses owners. While I am sure that the almost 2,000 small businesses in Laois and Offaly appreciate the support from the ICOB scheme the fact remains that what we need is an immediate change to the VAT rate and escalated efforts to reduce the cost of energy, which are both major drains on small enterprises with razor thin operating margins.”

“I am talking to small and medium size business owners on a daily basis, and they are all telling me the same thing; tinkering around the edges with schemes and supports may assist them briefly but ultimately the avalanche of costs will keep coming long after the support schemes have been closed.

Businesses need to be able to plan. They need to know that input costs such as energy and outgoing costs such as increased VAT rates will not wipe them out. I have spoken to many employers who feel utterly demoralised by the cost burden of trying to operate and keep the doors open,” Deputy Nolan concluded.


 Video of Deputy Nolan’s Contribution