Hospitality and entertainment VAT ‘should stay at 9% until 2025’

Oireachtas group also calls for new public holiday and voucher scheme to spur spending

The hospitality and entertainment sectors continue to need financial support, according to an Oireachtas committee. File photograph: The Irish Times

The hospitality and entertainment sectors continue to need financial support, according to an Oireachtas committee. File photograph: The Irish Times

 

An Oireachtas committee has called on the Government to extend the reduced 9 per cent rate of VAT out to 2025 to help hospitality and entertainment businesses recover from the “devastating” effects of the pandemic.

In a report on the two sectors, the committee on tourism, culture, arts, sport and media has made 27 recommendations stretching from financial supports and consumer spending initiatives to reform of legislation and guidelines.

Facility for the 9 per cent VAT rate, reduced from 13.5 per cent for tourism and hospitality businesses as part of the Government’s response to the Covid-19 crisis, is due to expire at the end of 2021.

Fianna Fáil TD Niamh Smyth, who chairs the committee, said the sectors had “suffered immense adversity” as a result of the pandemic.

“We heard evidence that hospitality businesses are on the brink of collapse, with some 50 per cent of restaurants facing permanent closure – while revenue across the hotel sector fell by more than €2.5 billion in 2020, marking an unprecedented drop of 60 per cent,” said Ms Smyth.

“The challenges facing the entertainment sector are no less severe. Evidence presented to the committee notes that, of 55,000 workers in the arts, 58 per cent have been wholly reliant on the Pandemic Unemployment Payment (PUP) or Employment Wage Subsidy Scheme.”

The economic and social consequences of coronavirus will continue to present “significant difficulties” for workers and businesses over the months and years to come, she added.

An extension of the 9 per cent VAT rate out to 2025 would “provide certainty” for businesses, the committee concluded.

Public holiday

It has also recommended that the rates paid under the Covid Restrictions Support Scheme be doubled for tourism and hospitality businesses, that the waiving of local authority rates be extended for these businesses for a full year and that the Government establish a voucher scheme and introduce a new public holiday to stimulate domestic spending.

The Government should modernise licensing laws and application processes to reduce bureaucracy and stimulate the night-time economy, said the committee. It also said extended trading hours should be brought in line with other European countries.

All additional licensing requirements, such as outdoor seating permits, should be simplified and moved online, while insurance reform should also be tackled urgently, the committee said, while the full rate of PUP should be maintained for workers in the entertainment sector until their industry is fully reopened.

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