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Mr Brian Fallon, newly elected President of the Restaurants Association of Ireland and Minister Varadkar publicising the governments reduction in VAT for Tourist sector (Martin Murphy/The Epoch Times)
DUBLIN—As part of the government’s new ‘Jobs Initiative’, Minister for Transport, Tourism & Sport Leo Varadkar has called on businesses in the tourist sector to pass on the reduction of VAT to 9% to customers.
Varadkar has welcomed the response form the Restaurants Association of Ireland and the Irish Hotels Federation.
“This measure has the potential to significantly boost jobs in the tourism industry. It’s one of the single most important measures in the government’s Jobs Initiative. But it will only work if businesses pass on the benefits of the lower VAT rate to customers.
“The Restaurants Association of Ireland and the Irish Hotels Federation are fully behind this initiative, and have called on their members to lower prices accordingly. And I would urge customers to support those businesses that are passing on the lower VAT rate.
“That’s why I am calling on tourism right operators across the country to act in the spirit of this measure, and pass on the VAT cut in full,” said Varadkar.
According to Minister Varadkar the aim of the lower VAT rate for tourism products is to reduce costs in the sector, improve competitiveness and create jobs. The minister believes that it will help to make Ireland an even more attractive destination for tourists.
Mr Adrian Cummins, Restaurants Association of Ireland CEO told The Epoch Times that he was pleased with the initiative and sees it as a vote of confidence from the government in the hospitality industry.
“The new government has clearly identified tourism and hospitality as an area for economic growth
… it shows that there is huge value in Ireland for eating out,” said Mr Cummins.
The Vat reduction from 13.5% to 9% translates into monetary value as 1 euro off a 25 euro meal, Mr Cummins said that this may not seem much, however for a person or a family holidaying in Ireland for a week it adds up over the period of their stay. “That should help the value message out there in the market place with regard to Ireland,” said Mr Cummins.
The VAT reduction initiative is an 18 month project and Mr Cummins hopes that tourists who are availing of lower prices this summer should be commenting on it when they go back home. “We will see the major benefits from it in our marketing and promotional campaigns in 2012.”
Major Expenses for Restaurants
Mr Cummins says that his organisation has been lobbying the government with respect to the high excise duties on wines. “We have the highest excise duty in Europe and that needs to be addressed as quickly as possible,” said Mr Cummins. He explained that the alcohol issue is something they are speaking with the government around addressing in the forthcoming budget in December.
“We clearly want them to address the whole area of wage agreements and Sunday pay, now, with immediate effect. Then we can move onto the issue of excise duty and alcohol.”
According to Mr Cummins 80% of restaurants are making a loss in Ireland, at the moment. “That’s a staggering figure … one restaurant per day is closing and 40% are closed on Sundays,” said Mr Cummins.
He believes that Sunday premium payments has a major input into these figures. Mr Cummins explains that regardless of the wage of a restaurant worker they still get a 33% premium for working on a Sunday. “Everyone knows that Ireland is a now 24/7 hospitality economy, Sunday should be treated as a normal day of work in our Industry … we are being penalised by a law that goes back to the 1940s for pay on a Sunday,” said Mr Cummins.
The restaurant sector is highly labour intensive according to Mr Cummins therefore the tourism and hospitality industry has the potential to create a large number of jobs in a short space of time.“We have said that if the government got rid of the Joint Labour Committee fees and the Sunday premium payments we would create 4,000 jobs nationally,” said Mr Cummins.
In closing, Mr Cummins said that the VAT reduction is welcomed, however, it may be outweighed by increased pay material costs for the restaurant sector as food prices start to rise.
