Pub and restaurant owners have reacted with dismay to the decision by the Government to restore VAT on food from 9 per cent to 13.5 per cent and say they will have no choice but to pass the rises on to consumers.
The temporary 9 per cent VAT rate for tourism, hospitality and some other services - including hairdressing - expired at midnight on Thursday, having been extended for the final time by the Government in February.
The Government has pushed ahead with the change despite intensive lobbying from vintners, restauranteurs and hoteliers.
Gina Murphy of Hugh’s restaurant on Merrion Row in Dublin, described the VAT increase as a “ridiculous measure in the times that we are in”.
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She said her own energy bills have gone from €4,000 every two months to €16,000. “We have no margin of error in the restaurant trade. There is no wriggle room here. We don’t have the money to cover that 4.5 per cent increase. We just don’t have it.”
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Dublin publican Noel Anderson, who owns the Lemon & Duke in Blackrock, the Little Lemon and The Bridge 1859 pubs, said he could not understand the decision when the Government is trying to drive down inflation.
“This will add fuel to the fire. What people have to realise is that when they go for food, a haircut or a night’s accommodation, it’s going to be dearer, thanks to the Government and not to us.
“The Government has been quite supportive of the hospitality, but this is a negative step.”
Ray Aughney of the Squealing Pig in Monaghan town said there is no sign of electricity or gas prices coming down and proprietors are already struggling with other increases.
“We are just after coming out of a year’s shutdown. I think plenty of places will close after this because it is definitely not good for business. VAT is VAT, but it has to be paid. You don’t get any rebate from it. You have to pass it on.
“The Government is pushing up the price of petrol and diesel. It is going to suck money out of the economy. It is definitely not good for the small and medium sized business.”
Adrienne Hanley from Murty Rabbitt’s bar in Galway city said the 4.5 per cent increase is a “path to destruction” for the hospitality sector.
“We are dealing with increases in businesses across everything – insurance, staffing costs, food operators and chefs have been like hen’s teeth. They can name their price and it has affected our business.”
Aidan Quirke, who runs the 10 bedroom Round Tower Hotel in Ardmore, Co Waterford said the increases will further squeeze the spending power of people who have had to endure a series of mortgage rate increases.
“Their disposable income is what gets spent in businesses like ours,” she said. “The consumer is being pushed and squeezed at every angle. It is a retrograde step.”
