Debate on hospitality VAT
Senators challenge the stated Exchequer cost of the 9% hospitality VAT rate and press for an immediate debate with the Finance Minister.
I support the comments made in the context of the amendment to the Order of Business by our party leader, Senator Darragh O'Brien. It seems the Government plays around with figures whenever it suits, as we have heard in the Seanad referendum debate. With regard to the 9% VAT rate, the figure the Minister for Finance indicated in public within the last week or two was that there was a loss to the Exchequer of €350 million. That figure has been challenged by Retail Excellence Ireland, which has indicated that a recent Deloitte report relayed how the intervention cost the State €88 million in net VAT receipts, with the employment gain equating to €261 million. The net impact to the Exchequer is a benefit of €173 million.
These are the figures but the reality on the ground is that the reduction in VAT from 13.5% to 9% resulted in the creation of 13,500 jobs in the services and hospitality sector. I know from speaking to people in the sector who welcomed the initial reduction, telling me on a number of occasions in my own part of the country where unemployment is significant that they had taken on extra workers. The question remains that if the increase in the VAT rate goes ahead in the budget, what will happen all the small businesses? These are coffee shops which employed an extra person when they had two or three already, for example. That is where the 13,500 jobs have mainly come from, rather than the major hospitality areas. Will the businesses have to release the extra people that they took on if they have to pay extra VAT? It seems more likely that businesses will increase prices between now and Christmas, which will prevent people from spending. Getting people to spend money was the main purpose of the exercise.
The Minister for Finance indicated in the Dáil yesterday that this was a pump-priming exercise that had worked but I hope he is right. I understand perfectly well Senator Clune's question of where to find the money and the bouncing around of figures ranging from €350 million to €88 million. It is still a significant sum in the current climate. I plead with the Deputy Leader to try to use her best influence in this regard and formulate an opportunity to debate this important for the hospitality sector in the House.
Comment on this
I was delighted to hear this morning that Ireland had increased its haul of Michelin star restaurants to eight. They are the restaurant at Mount Juliet, the Cliff House Hotel, Thornton's, Chapter One, The Aniar House, Campagne, Bon Appetit and L'Ecrivain. This indicates that our food and restaurant sector is in great health, although many Senators have spoken about the VAT rate this morning. I requested a debate in the House yesterday and it is a serious issue; I was going to point to the figures that Senator Mooney mentioned from the Deloitte report, which indicates the actual cost at €88 million, with an overall gain to the Exchequer at €173 million. Senator Mooney also mentioned potential job losses. I support Senator Darragh O'Brien's call for a debate on this issue, and although it should not necessarily be today, it should come in the near future in order that we can fully discuss this matter, which is of critical importance.
Comment on this
If it is so critical, why should it not be done today? There are only statements scheduled for today.