Vat rate cut to 9pc for restaurant sector is ruled out, despite cafe closures across the country

Earlier this year, then taoiseach Leo Varadkar suggested that splitting the Vat rate, and allowing restaurants to charge just 9pc, was a measure worth examining in order to help the sector.

However, in a written reply to a Dáil question, Finance Minister Michael McGrath ruled out any change to the current Vat rate for the hospitality sector and also splitting the Vat rate for restaurants.

‘Even restricted to food and catering services, the estimated full-year cost is €545m’

Mr McGrath told John Lahart, a Fianna Fáil colleague representing Dublin South-West, that the cost of a further temporary Vat reduction to 9pc for the entire hospitality sector for a full year is estimated to be €764m.

“Even where the measure is restricted to food and catering services, the estimated full-year cost is €545m,” said Mr McGrath. “I have no plans to reduce the Vat rate for the tourism and hospitality sector.”

In November 2020, the Government reduced the Vat rate covering the hospitality sector from 13.5pc to 9pc, and the lower rate remained in place until August 31 last, when it reverted to 13.5pc.

However, against a background of closures in the restaurant sector since January, the Government has faced a chorus of calls from the sector to restore the Vat rate to 9pc.

‘We will continue to see more closures in the restaurant sector. It’s not viable’

In his reply to Mr Lahart, Mr McGrath said: “It is noteworthy that 14 EU countries have a Vat rate of 12pc or higher on food services. Our nearest neighbour, Great Britain and Northern Ireland, has a Vat rate of 20pc on food services.

In response to Mr McGrath’s words, CEO of the Restaurants Association of Ireland Adrian Cummins was insistent.

“If we want to have a sustainable food-led sector, with restaurants and cafes, the only show in town is the reduction to the 9pc Vat rate. That is the viable rate for the sector,” he said

“Otherwise we will continue to see more and more closures in the sector – because it is not viable for them at the moment.”

Mr Cummins pointed out that Taoiseach Simon Harris had “said he was going to prioritise small business and hospitality – but I don’t see any support measure that is going to be able to support us.”

Instead, he said, everything the Government has done “is anti-productive for our industry and puts us at more risk”.