Small businesses in crisis as devastating impact of 13.5% VAT rate is now irrefutable

Independent TD for Laois Offaly Carol Nolan has said there is now an ‘absolutely compelling and irrefutable case for the reintroduction of the 9% VAT rate for the hospitality, retail, hairdressing and food led-services sectors in the forthcoming Budget.’

The Independent TD, who has been consistently engaging with The Restaurants Association of Ireland (RAI) on the issue, has previously warned Government that the economy faces the spectre of continuous rolling closures if the lower VAT rate of 9% is not reintroduced:

“The latest data I have received from the RAI clearly and persuasively demonstrates the need for a guaranteed reintroduction of the lower VAT rate. In fact, we now know that the number of restaurants, cafés and other food-led businesses forced to close their doors for good since the 50% hike in the hospitality sector’s VAT rate from 9 to 13.5% last September has reached a total of 577,” said Deputy Nolan.

“In terms of my own constituency, it is also vitally important to recall that these losses are taking place in the context of the €23 million in liabilities that were ‘warehoused’ as part of the Tax Debt Warehousing Scheme that was introduced for businesses following the pandemic. In fact, as I have previously highlighted, at least 1,530 businesses in the constituency are currently impacted by these liabilities.”

“755 of these businesses are in Offaly, with tax debts of €11 million while in Laois there are 775 businesses with €12 million in warehoused debts.”

“The current 13.5% VAT is suffocating the financial life out of these small businesses. They simply cannot gain a foothold to bring about the kind of recovery they need while keeping up with the number of outgoings that government continues to demand both directly and indirectly including from energy costs and local authority rates.”

“If Government cares at all about offering a light at the end of this particular tax tunnel then it needs to signal, clearly, immediately, and unequivocally that it will lower the VAT rate to 9%,” concluded Deputy Nolan.