It was 6.30pm on a mundane Monday. A Dublin city street lined with shabby office fronts had fallen silent after the end of another working day. Only the lights of a restaurant still glowed, beckoning a pair of stomachs grumbling with hunger. The expression on the manager’s face could not have been more derisive. “You do not have a booking,” he scolded, as though addressing fourth class truants pleading the dog ate our homework. “There is no point in waiting. We are booked out.”
Skulking away, the whiff of hubris mingling with garlic and basil followed us out the door. Chock-a-block restaurants are a common sight in the capital, any day of the week. That includes this week, when the Government pandered yet again to the hospitality sector’s intense lobbying and retained its specially reduced VAT rate of 9 per cent. An increasingly common sight, too, are menu prices exceeding €30 for a steak and €20 for a chicken dish, despite cattle and fowl being as populous as raindrops in Ireland.
Demand for tables at a certain restaurant in Temple Bar is so great that an elephant has a better chance of squeezing into heaven through the eye of a needle. Two starters on the menu are priced at €90 and €140. No doubt the cuisine is par excellence.
A headline in this newspaper on Wednesday had as much shock value as Claude Cockburn’s old chestnut about a “small earthquake in Chile, not many dead”. This one announced: “More expensive to eat out in Dublin than London, Paris and Rome, survey shows”. Based on average, mid-market restaurants in 20 European capital cities, the survey conductor, a casino promoter called Bonusetu, calculated that a three-course meal for two people in Dublin costs €80, compared to €60 in glittering Paris and €70 in the eternal city of Rome.
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How sad for the property developer-turned-politician Mick Wallace. There he was telling right-wing Italian MEP Alessandro Panza he had three wine bars in Dublin but, when pressed for clarification, alack, he said he doesn’t own any. Instead, he gets paid up to €499 per month for his consultancy service to the wine bars he used to own before he went bankrupt and which are now owned by Wallace Calcio. That company’s current shareholders, whom Wallace calls his “friends”, are his niece Tina Harpur, his former partner Patricia Barry, and three people from Italy, where Wallace spends much of his time and where he also used to own a vineyard until he sold it to his brother.
Micheál Martin said there was an “onus” on the hospitality sector to pass on the saving to their customers. Good luck with that
When his local newspaper, the Wexford People, put it to him that he still has “quite a connection” with the wine bars’ owners, Wallace, replied: “Yeah, but it’s not worth a f***ing penny.” Odd that he would accept €5,900-a-year from friends for giving them advice about a supposedly worthless business. But let’s not dwell on Chianti Mick, he tells us. It’s just a media distraction. There are bigger fish to fry.
It goes without saying – but if it is not said, there will be complaints – that not all businesses in the hospitality sector are thriving. Many operators are hard-pressed to pay increased food and energy bills and to recruit staff in a country with virtually full employment. The same could be said about other sectors, too, but they do not benefit from a 4.5 percentage point reduction in their VAT rate.
This perk for hotels and restaurants, which has been extended until the end of the tourism season in September, will cost the exchequer an estimated €280m. Reports preceding the Cabinet’s decision on Tuesday suggested that the Department of Finance was not in favour of the extension, indicating that it was entirely a political decision to kowtow to hoteliers and restaurants.
Backbone of tourism
Lobbyists for the sector appear to make a strong case for their special tax status by arguing that they are the backbone of tourism, Ireland’s biggest indigenous sector. It generates about €5 billion a year for the economy. That includes all aspects, such as B&Bs, guesthouses, tourist attractions, camp and caravan sites, coach operators and car hire. Last September, Fáilte Ireland published its annual barometer as the season came to an end. It showed that 45 per cent of accommodation operators had catered for more guests in the first eight months of the year than they did in the year before Covid-19 paralysed the globe in 2020.
Almost immediately after the Government announced it was retaining the 9 per cent rate, the American owners of the five-star Shelbourne Hotel, which promotes itself as Dublin’s finest address, reported that its revenues had almost trebled since the previous 12 months while its costs more than doubled, leaving it with an operating surplus of $17.4 million (€16.4 million). You could keep a small country in caviar with that.
The Shelbourne is an exceptionally lovely and historic hotel where princesses and dictators have lain their heads upon its pillows. An entire television documentary series was dedicated to the establishment. Others that do not have the same allure have been accused of hiking their rates whenever there is a big event on, especially in the capital. This is the sort of behaviour that gives a place a bad name and damages the country’s tourism business rather than enhancing it. It ought to be punished, not rewarded.
After the Cabinet decided to keep the 9 per cent VAT rate on Tuesday, Micheál Martin, the Tánaiste and Minister for Foreign Affairs, said there was an “onus” on the hospitality sector to pass on the saving to their customers. Good luck with that.
Traders and politicians try justifying the exemption from the 13.5 per cent rate by arguing that the inflated prices for gas and electricity are putting untold pressure on hotels and restaurants, but wholesale energy prices are falling almost as dramatically as they spiralled last year. Electricity prices fell by 41.4 per cent last month alone. These wholesale declines will translate into retail price reductions in the coming months. Yet, some highly profitable hospitality outlets will continue to benefit by making a reduced VAT contribution to the national purse.
For citizens who are struggling to make ends meet in the cost-of-living crisis, these establishments tell a story about the Ireland they live in. He who can shout the loudest gets the willing ear.