VAT To Be Election Issue

The Licensed Vintners Association has said it plans to make the restoration of the 9% VAT for food an election issue in the run up to the Local and European Elections this summer.

It will begin by writing to all public representatives for Dublin on this issue, seeking their commitment for restoring the lower rate of VAT for food and highlighting how the Government measure has been damaging to hospitality.

Taoiseach Leo Varadkar TD recently said a reduction in VAT for food "warrants consideration", while several politicians have expressed their support for the reintroduction of the 9% rate for food, including Minister of State Neale Richmond TD.

The 9% VAT rate for food had been in place for 10 of the last 12 years, before it was discontinued by Government last September. LVA says that the average Dublin pub earns 35% of turnover from food. That figure rises to 50% of turnover for a significant number of food-focused pubs across the capital. 

The LVA adds that since the Government increased the VAT rate on food last autumn, food businesses were forced to raise their menu prices. Pubs across Dublin have highlighted how damaging this has been, with customers also expressing their distaste for the measure. 

Donall O’Keeffe, chief executive officer, LVA, said: 

"The simple fact of the matter is that the Government should never have increased the VAT rate for food last year. It immediately pushed the level of taxation applied to food up by 50%, and that had an instant knock-on impact on menu prices.

"The Government is now seeing the impact of that decision. There are hospitality businesses having to shut their doors for good on a near-daily basis. Raising the VAT rate on food and then quickly following that up with the imposition of other mandatory costs for small, low margin businesses such as the increased minimum wage, the increased sick leave entitlements, the extra employers’ PRSI and the pension auto-enrolment is making the trading environment extremely challenging."