The Government's cost-of-living supports for the coming months has been welcomed by many businesses and representative groups across the country.
With speculation mounting over recent weeks of the future of hospitality, fears were mounting that the 13.5 per cent VAT rate would be returned in a big blow to hospitality.
However, in a welcome move for hospitality, the Government announced that the VAT rate would be kept at 9.5 per cent until August 31st.
The Temporary Business Energy Support Scheme will be extended to May 31st, 2023, and enhanced.
The Government confirmed the threshold to qualify for the support will reduce from a 50 per cent increase in electricity or gas costs to a 30 per cent increase, to apply retrospectively from September 1st, 2022.
This move was welcomed by the Licensed Vintners Association (LVA), as they praised the Government for keeping extra tax on consumers off the menu.
The LVA's chief executive Donall O’Keeffe said: “We are glad that sense has seen out and that the VAT rate for hospitality will not be changing until after the summer. While we would have preferred to have seen this measure postponed for 2023, it is positive that the Government has kept the extra tax on consumers off the menu for now.
"In our view it made no sense for the Government to be pushing up prices while there are such cost of living challenges in this country.
"It would have also been short-sighted to introduce extra taxes just at the beginning of the tourism season. Everyone in the hospitality industry will be breathing a sigh of relief with this news.
"We are also very pleased to see the extension of the TBESS scheme and the commitment to simplifying this process. We know this has been an issue for a lot of pubs and hospitality businesses who have found it challenging to make use of the scheme to date"
The extension of the 9 per cent VAT rate for hospitality was also welcomed by the Vintners Federation of Ireland (VFI).
However, Paul Clancy, the group's chief execurive, warned that the sector faces problems when the VAT rate expires.
“The coming six months are vital for the pub trade, with the St Patrick’s weekend seen as the traditional start of the tourist season and on into summer, so maintaining the 9 per cent VAT rate will assist those businesses serving food and bring an element of confidence.
“However, we are in a situation where the problems an increase in VAT will bring, namely pub closures and job losses, will re-emerge later this year once the extension lapses.
Our message to Government will remain the same – the hospitality sector needs VAT at 9 per cent until 2026 when tourist numbers are expected to return to pre-pandemic levels.”
