Hoteliers Claim Tactical Plan Blocks Lower VAT Rate Recovery

Hoteliers in Ireland have expressed concerns over what they describe as a “tactical plan” aimed at preventing the reinstatement of a lower Value Added Tax (VAT) rate for the hospitality industry. This rate was previously reduced to support the sector during the COVID-19 pandemic and the ongoing cost-of-living crisis but has not yet been reinstated.

The recent release of the Summer Economic Statement has reignited discussions on the potential return of the lower VAT rate. According to reports, reinstating the reduced rate could cost the government approximately €1 billion annually. This figure raises concerns about the financial implications, particularly regarding the government’s ability to reduce other taxes.

Paul Gallagher, Chief Executive of the Irish Hotels Federation, voiced disappointment over the current situation, highlighting the negative impact on both hospitality staff and customers. He emphasized that the absence of a lower VAT rate hinders the recovery of the sector, which is still grappling with the aftermath of the pandemic and rising operational costs.

Gallagher stated, “The industry has been waiting for support that could help ease financial pressures. A lower VAT rate is essential for our competitiveness and the overall health of the economy.” His remarks underscore the sentiment among hoteliers that further delays in tax relief could jeopardize the recovery of the hospitality sector.

As the government prepares for the upcoming budget, the viability of reinstating the lower VAT rate remains uncertain. Stakeholders are closely monitoring developments, as the decision will significantly influence the future of the industry and its ability to attract both domestic and international visitors.

The hospitality sector, which plays a crucial role in Ireland’s economy, continues to advocate for measures that would stabilize and support its recovery. The call for a reduced VAT rate highlights the ongoing challenges faced by hoteliers and the importance of governmental support in fostering a resilient economic environment.