Between Minister for Enterprise Peter Burke and the hospitality industry’s lobbyists, it is hard to say who has emerged with the bigger black eye as the dust settles on Budget 2025 and the fiasco over the VAT rate.
The Fine Gael TD tried to flog a dead horse by pushing unsuccessfully for the 13.5 per cent rate for food-led businesses to be cut back to the temporary Covid-era rate of 9 per cent. Whether or not he will be thanked for that by the sector, which has well and truly vented its spleen since Tuesday’s budget announcement, is an open question.
As for the hospitality lobby, there is a profound sense that it overplayed its hand in recent months. The Restaurants Association of Ireland and pub lobby groups pursued the VAT issue doggedly, perhaps to the detriment of a wider, more detailed conversation about the issues facing the sector.
That their “#VAT9″ campaign came a cropper in the end was completely predictable. The economic justification for the cut – which, by Department of Finance estimates, would have cost the exchequer at least €545 million in just one year – was patchy at best. With so many nests to be feathered by the Coalition in advance of an election, the opportunity cost was also too vast to be taken seriously.
If the public and, by extension, politicians have grown weary of the sector’s insistent griping about increases to minimum wages and other issues, that is not particularly surprising either, as Cantillon said in August.
Instead, pubs and restaurants should – but probably won’t – take solace in the €167 million set aside for energy cost subsidies and in the fact that the tax component of Tuesday’s damn-the-torpedoes pre-election budget alone will put €1.4 billion into people’s pockets.
Fiscally imprudent? Perhaps, but the Government’s strategy should, in turn, put bums on barstools and booths over the coming year. If that doesn’t salve the hospitality lobby’s soul, Christmas – a time for elevated prices across the pub and restaurant trade – is just around the corner.
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