Updated at 09:20
The president of the Irish Hotels Federation, Denyse Campbell has said that the sector remains hopeful that the Government “will continue to support the industry” and not return the VAT rate to 13.5 percent.
Ms Campbell told RTÉ radio’s Morning Ireland that the Government needed to prioritise the sector which employs one out of 10 people in the country, with 70 percent employed outside Dublin.
Returning the VAT rate to 13.5 percent from the nine per cent introduced during Covid lockdown in 2020 would make it the third highest VAT rate in Europe, she said. The nine percent rate was in line with most European countries.
The VAT rate needs to stay at nine per cent to maintain competitiveness for the industry, added Ms Campbell.
The cost of doing business had escalated with the sector experiencing “crippling increases” of 300 percent in energy bills, 28 per cent for food and increased linen costs.
Tourism figures last year were 27 percent lower than 2019 so the sector was still recovering, she said. “We are pleading with the Government. This is about €400 million at a time when the consumer does not need extra costs.”
Ms Campbell pointed out that the hospitality sector needed the VAT rate to remain at nine percent so they could be competitive. “It is the correct rate”.
When asked about reports of price “gouging” by Dublin hotels she said that their research had shown that Dublin prices rose 18 per cent in three years.
“The price of the last few rooms are not reflective of the value that is there for customers.”
It comes as the Government is set to axe the 9 per cent VAT rate for the hospitality industry, despite fresh calls for the lower rate to be extended.
'Listening excercise'
As the Irish Examiner reports, representatives of the hospitality industry met with the Minister for Finance Michael McGrath on Monday evening in order to restate their demand for the retention of the Vat rate.
While the meeting was described as a "listening exercise", the Department of Finance is said to be keen to end the tax break amid accusations of “price gouging” by the industry.
On the conclusion of the meeting, the Restaurants Association of Ireland (RAI) said there was "no indication" if the VAT rate would remain at 9 per cent or return to 13.5 per cent.
In a statement, the RAI said: "Ministers McGrath and Donohue met with representatives of the Hospitality sector.
"They listened to the concerns of industry representatives who advocated for the retention of the 9 per cent vat rate for Hospitality.
"There was no indication if it would increase or remain at 9 per cent The industry are hopeful the ministers will keep the rate at 9 per cent to protect low-margin businesses like restaurants, pubs and cafés."
Over the weekend, the Restaurants Association of Ireland warned one in every five restaurants in Ireland will be at risk of closure if the Government increases the Vat rate back to 13.5 per cent.
On Thursday, a cabinet sub-committee meeting is expected to consider the future of the various cost-of-living supports, including the reduced Vat rate with decisions being taken by the full Cabinet the following week.
The Coalition leaders met on Monday evening, ahead of Tuesday’s Cabinet meeting, but sources said the VAT issue is not expected to be formally discussed.
On the conclusion of the meeting, the RAI said there was "no indication" if the VAT rate would remain at 9 per cent or return to 13.5 per cent.
Additional reporting Vivienne Clarke
