Speculation That 9% VAT Will Increase
The special VAT rate for hotels, restaurants and pubs is to be raised in the upcoming Budget, the Irish Examiner reports.
A reduced 9% VAT rate was introduced to help support the hospitality sector during the pandemic, but the Examiner says that Finance Minister Paschal Donohoe is now adamant that this emergency measure be reversed and is examining everything up to a full return to the 13.5% rate.
The move will be unpopular to hospitality businesses that are currently struggling with rising energy prices.
Some members of Fianna Fáil are also against any change to the VAT rate and demanded that it be retained at a meeting of the parliamentary party.
The speculation comes after Mr Donohoe sharply criticised hoteliers over high room rates at a recent pre-budget meeting. He told hospitality representatives that the Government had provided strong supports for hotels in recent years which had got them through Covid-19.
He said he was therefore extremely disappointed that value for money for those looking to holiday in Ireland had become a serious issue so quickly after restrictions were lifted.
The Commission on Taxation report recommended that the special 9% VAT rate should be increased to 13.5%.
Reacting, Mr Donohoe said he would be “very carefully considering the recommendation” and would “take it into account in the final decision that the Government will make in two weeks’ time”.