Restaurants Association: lower VAT boosts hospitality jobs

More than 45,000 new jobs have been created since the reduced VAT rate of 9 per cent was introduced in July 2011, according to the Restaurants Association of Ireland.

An economic report commissioned by the association, and conducted by economist Jim Power, examined the introduction of the new VAT rate in July 2011, and the impact its reduction from 13.5 per cent to 9 per cent had on the food, tourism and hospitality sectors.

The report said 145,900 people were employed in the accommodation and food services sectors during the first quarter of 2016, leading to a total contribution of €695 million to the exchequer through payroll taxes.

It found an increase of 31,000 in direct employment in the accommodation and food services sectors between the second quarter of 2011 and first quarter of 2016. It said the extra 31,000 jobs resulted in the creation of 14,260 more indirect jobs in the wider economy.

The association said the increase in direct employment of 31,000 saved the exchequer €620 million in social welfare payments.

Adrian Cummins, chief executive of the Restaurants Association of Ireland, said the report highlights that the lower VAT rate has been a major driver of employment growth.

“It is a substantial number of new jobs to result from just one government action. The 9 per cent VAT rate has benefited regions greatly across the country and we would like to see that maintained.”

He said the report demonstrates the considerable social welfare savings made by exchequer using the model that “for every 10,000 people off the live register, and back in employment, it results in a net gain to the exchequer of some €200 million”.