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Lower VAT rate on food essential for survival of hospitality sector – Cannon & Ahearn

1st February 2024 - Fine Gael Press Office

Hospitality businesses should be afforded the benefit of a lower VAT rate on food services if they are to continue to survive and thrive, two Fine Gael politicians have said.

Deputy Ciarán Cannon said: “We have to acknowledge that right now there are cafes and restaurants across Ireland fighting for their survival. They are encountering the perfect storm of cost increases and they need support. We can and should respond by reducing the VAT rate on food service to 9pc.

“I’ve raised it with the Taoiseach who has confirmed that such a reduction is technically possible and it warrants consideration. Government should also announce details of the €257m Increased Cost of Business (ICOB) grant scheme which has been made available to inject much-needed cash into small businesses – there are many businesses who have expectations and want to know if they will be met.

“I will continue to work with Minister for Trade, Enterprise and Employment Simon Coveney too to develop a good package for business in Budget 2024,” Deputy Cannon said.

Senator Garret Ahearn, Seanad Spokesperson on Enterprise, Trade and Employment said: “The hospitality sector previously benefited from a reduced VAT rate, a measure that was crucial during several crises. This was always intended to be a temporary relief, and it has now reverted back to 13.5pc as was well flagged in advance.

“While Government has significantly improved conditions for low-income earners, such as additional leave, pension contributions and further increases in the minimum wage, these have impacted on business owners and we are listening to them – the ICOB scheme should go a long way towards addressing some of those issues.

“But many of our food-serving pubs, restaurants and coffee shops are family businesses, in some cases, who have been trading for generations. Their contribution to the fabric of the community is more than just economic and our business policies must go further than ensuring survival – they have to be enabled to thrive.

“A tailored VAT rate for food services could provide much-needed boost to these vulnerable businesses that face unique economic pressures,” Senator Ahearn concluded.

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