The upcoming rise in the tourism and hospitality VAT rate will have a negative impact on business in the city, according to nine out of ten Dublin pubs.
This follows on from the Government’s announcement that the 9 per cent VAT rate for tourism and hospitality is set to increase to 13.5 per cent from the end of February - representing a 50 per cent jump. The Licensed Vintners Association (LVA) says this will impose additional inflation on hospitality at a time when there are widespread costs accumulating across the sector, and they are calling on the Government to extend the 9 per cent VAT rate throughout 2023.
LVA chief Donall O’Keeffe said: “This spike in the level of taxation will certainly have an immediate impact on the cost of eating out. When you consider that pubs account for the joint second highest portion of the Irish foodservice market this seems like a damaging inflationary measure from the Government."
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Mr O'Keeffe also said it does not make sense to anyone in hospitality for a 50 per cent jump in the VAT rate to be introduced at a time of rising costs across the sector. The current 9 per cent VAT is the right rate from an international competitiveness perspective, Mr O’Keeffe added, which will be important ahead of the upcoming tourism season.
The LVA did a ‘Cost of Doing Business Survey’ which highlighted the significant cost increases Dublin pubs have experienced over the course of the last year. The survey revealed six out of every ten Dublin pubs saw their energy bills approximately doubled, and more than a fifth say their bills have approximately tripled in that timeframe.
Publicans have bleak expectations for 2023. Six out of ten publicans say they have a negative outlook for the hospitality sector in 2023, while 43 per cent say they are negative about the outlook for their own business for the year ahead. Insurance costs and drink supply costs are also weighing on their minds, as well as food supply and average wage costs increases.
Speaking about the survey results, Mr O’Keeffe said, “As this survey highlights the current outlook amongst the publicans of Dublin is downbeat. They have been experiencing a surge in cost increases over recent months covering a range of different areas, ranging from energy prices, insurance, to food and drink supplies. All of this is putting immense pressure on these businesses who are still recovering from the pandemic.
"When this is coupled with concerns about the upcoming licensing changes and serious interest rate hikes, it is obvious why there is a pessimistic attitude across the sector.”
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