Hotels, cinemas, museums, hairdressers, restaurants and cafes face a Vat hike of 4.5 per cent after the Dáil voted to reverse the concession introduced during the recession to help the struggling hospitality sector.
The abolition of the 9 per cent VAT rate for the hospitality sector followed a rowdy late night debate in which the House voted by 64 to 36 to revert to the 13.5 per cent rate, with 43 abstentions. The increased rate comes into effect in January next year.
Rural TDs argued although Dublin hotels were “coining it in” with their accommodation charges, rural areas would be devastated by the increase.
The Government was supported in the vote by a number of smaller parties and Independents including Solidarity TDs Ruth Coppinger and Paul Murphy, Social Democrat TD Róisín Shortall, Green TDs Eamon Ryan and Catherine Martin, and Independents Tommy Broughan, Joan Collins and Michael Lowry.
Sinn Féin, Labour, former Fine Gael TD Peter Fitzpatrick and a number of other Independents opposed the measure.
Labour leader Brendan Howlin who as minister brought in the measure with then-minister for finance Michael Noonan, said it had worked. But it was funded by a very unpopular levy on pensions.
A number of Fianna Fáil TDs expressed their opposition to the Vat increase. Roscommon-Galway TD Eugene Murphy said “this is going to mean jobs will be lost”. He said insurance for small hotels and restaurants had doubled in the past couple of years and that the increase should be limited to 2 per cent.
Sinn Féin TD Martin Ferris said he told the Fianna Fáil TDs they should vote against it "because if they don't they're absolute hypocrites".
Turning to the Fianna Fáil benches he said: “Sure mother of Jesus what are ye at lads? Stand on your own two feet. Have a bit of balls. Stand up and play it by your conscience.”
Fianna Fáil abstained in the vote.
Minister for Justice Charlie Flanagan said the 9 per cent VAT rate would be retained for national and regional newspapers to assist them to remain competitive facing the challenges of the modern media landscape.
The lower rate was also retained for sports facilities “in order to encourage healthy activity through facilities remaining affordable across this sector”.
Independent TD Danny Healy-Rae described the VAT move as a “savage attack” on rural Ireland and “direct attack” on Kerry, adding: “Dublin is not suffering at all.”
Independent Mattie McGrath criticised Minister for Tourism Shane Ross who was absent for the debate.
“Where is Mr Ross?” he asked. “He’s supposed to be Minister for Tourism, and it’s a damn bad job he’s done of it as it is.”
Minister of State for Tourism Brendan Griffin acknowledged the challenge the change would bring to many people around the country.
The VAT cut for the hospitality sector was introduced as a temporary measure in 2011 for three years and was reviewed and retained every year from 2014 onwards.
Mr Griffin said nobody was talking about the 25 per cent increase in the tourism provision for rural areas, among the budget measures.
