Tomorrow's VAT increase "will close businesses" warns restaurants' association

The level of VAT paid by hospitality businesses is to increase from 9% to 13.5% tomorrow (Friday) in a move that the Restaurants Association of Ireland warned would be "the final nail in the coffin" for many small cafes, restaurants and pubs.

Prices paid by Irish consumers for a range of products are set to rise again from midnight, as excise duty on fuel will also increase, meaning petrol will cost an extra 7 cent per litre, and diesel 5 cent more.

The Restaurants Association of Ireland (RAI) described the move back to a higher VAT rate for hospitality businesses as "nonsensical".

It said this would add to consumer inflation and would erode Irelands competitiveness as a tourist destination.

"The increase is wrong at a time when the country needs to reduce inflation. A VAT increase only adds to inflation," said Adrian Cummins, the chief executive of the RAI.

"The Government needs to restore the 9% VAT rate for food-related hospitality businesses in Budget 2024, and we will me making the case for this when we meet with the Minister for Finance next week.

"The increase in the VAT rate is the final nail in the coffin for many small cafes, restaurants and food led pubs," he concluded.