Peter Burke thinks the VAT cut for the hospitality sector announced in the budget will salve the troubled souls of the sector’s emboldened lobbyists. “This argument is finished,” the Minister for Enterprise told reporters on Wednesday.
That the Fine Gael politician swiftly wants to draw a line under the matter is not surprising. One budget ago, Burke was left with egg on his face when, amid reports that he had pushed hard for a VAT cut for hospitality, the policy was left on Merrion Street’s budget cutting-room floor.
Speaking to reporters at the time, he rejected a charge of failure. All of this after a noisy campaign by publicans, hoteliers and the Restaurants Association of Ireland (RAI) among others.
This time, however, Burke has won the arm wrestle at the Cabinet table over the 9 per cent VAT rate. Not that it has completely satisfied the lobbyists.
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They’re wondering why the reduced rate will only come into effect in July next year. Pubs will have to “endure another six months of crippling costs”, the Vintners Federation of Ireland said.
RAI chief executive Adrian Cummins, meanwhile, said July was “too far away for many businesses on the brink”.
If it sounds like the “argument” is far from over, another one appears to be brewing in parallel.
For what the policy lacks in economic reason, it also lacks in popularity, according to polling.
In the context of a blushingly pro-business budget with little in the way of targeted measures for workers beyond a minimum-wage increase, the opposition has jumped on the VAT cut.
The “McBudget”, as the Social Democrats dubbed it, will bolster the operating margins of large multinationals such as McDonald’s along with the mom-and-pop coffee shops at the heart of the Coalition’s messaging.
On Wednesday, Burke even dispensed with the polite fiction from some Government figures that the VAT cut might translate into lower prices for consumers. “It’s up to businesses what price they charge,” he said, “what profit level they have in their business.”
A lot of money – €232 million in 2026 and €681 million in a full year – and a similar quantity of political capital is being spent on a policy of questionable benefit at best.
Meanwhile, if it looks as though employers have taken up residence in Government Buildings, as Unite general secretary Sharon Graham said on budget day, then hospitality lobbyists appear to have installed themselves at 23 Kildare Street, Dublin, at the Department of Enterprise, Tourism and Employment. And they might prove difficult to shift.
