Nolan: No VAT rate reduction “a body blow to small businesses”
Laois/Offaly TD Carol Nolan has responded to reports that there will be no reduction of the 13.5% VAT rate for the hospitality and retail sector in Budget 2025 despite assertions from the Restaurants Association of Ireland (RAI) that the move will result in mass closures across the food led hospitality sector.
The independent TD said the move is indicative of “a major economic blind spot at the heart of Government” and that she now fears the worst for the many small businesses in her own constituency who have already signalled the clear need for the VAT rate to be reduced to 9%:
“If the reports emerging today are confirmed by Government during the Budget announcement then I fully expect a wave of closures to take place in the coming weeks and months,” said Deputy Nolan.
“It is incomprehensible to me that Government can actively ignore or downplay the reality that the number of restaurants, cafés and other food-led businesses forced to close their doors for good since the 50% hike in the hospitality sector’s VAT rate from 9 to 13.5% last September has already reached a total of at least 577.
“I have consistently made the point that in terms of my own constituency, these losses are taking place in the context of the €23 million in liabilities that were ‘warehoused’ as part of the Tax Debt Warehousing Scheme that was introduced for businesses following the pandemic.
“In fact, as I have previously highlighted, at least 1,530 businesses in the constituency are currently impacted by these liabilities.
“755 of these businesses are in Offaly, with tax debts of €11 million, while in Laois there are 775 businesses with €12 million in warehoused debts.
“I understand that a grant package of €4,000 will be announced to support these businesses, but the stark reality is this money will probably be wiped out by energy costs and a number of other price pressure points such as rising rents.
“This is, to use that well-worn phrase, a significant lost opportunity, and one that Government will come to regret almost immediately as the shutters come down on local traders,” concluded Deputy Nolan.