A row has emerged between Fianna Fáil TD Niall Collins and some Fine Gael representatives over his recent dismissal of a blanket cut to the VAT rate for the “price-gouging” hospitality sector.
Mr Collins, Minister of State at the Department of Justice, said luxury and five-star hotels benefiting from a universal rate reduction to 9 per cent would sit “very, very uncomfortably with me”.
Minister for Enterprise Peter Burke on Thursday “unequivocally” reaffirmed the Government’s commitment to cut the VAT rate for the hospitality sector in the wake of Mr Collins’ remarks.
Fine Gael TD John Clendennen, who has previously worked in Irish and international hotel chains, questioned the Limerick politician’s claim that the industry has engaged in “immense” price gouging.
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Some Fine Gael Ministers also criticised Mr Collins for trying to “split hairs” and for criticising a policy that would help support entry-level jobs in rural Ireland.
This week it emerged the full-year cost of the proposed VAT cut for the sector would be almost €1 billion, taking up the majority of the €1.5 billion tax package available for Budget 2026.
It is understood the Government is now considering delaying the cut until the middle of next year and potentially applying it food and drink services but not accommodation.
Mr Collins told Limerick’s Live 95 radio this week he is “not convinced that a VAT reduction is merited within the hospitality sector”. He said there was “little to no evidence” that a previous temporary reduction from 13 per cent to 9 per cent for the sector “was actually passed on to the consumer”.
“There’s no evidence that that ever happened. And secondly, we saw an immense amount of price gouging within the sector in recent years,” Mr Collins said.
The Fianna Fáil TD said he would favour “targeted interventions” for parts of the hospitality sector “where there is a genuine threat of job losses”.
Mr Collins repeated his opposition to a blanket cut on RTÉ Radio 1 on Thursday morning.
However, Mr Clendennen, a Fine Gael TD for Offaly, told The Irish Times he “was not so sure” about Mr Collins’s claim there was widespread evidence of price gouging in the sector. He said many hospitality businesses have come under “pressure” with rising costs.
He said he supported the VAT reduction, adding that “we need to try to ensure that the maximum number of hospitality businesses can remain viable”.
Mr Collins’s comments went down badly with Fine Gael Ministers, one of whom pointed out that he seemed to be at odds with Taoiseach Micheál Martin, who this week indicated support for the measure.
Another Fine Gael Minister said he felt Mr Collins was complicating matters by singling out luxury hotels. The Minister said it was difficult to hear “a rural TD trying to split hairs” over something that would create and sustain entry-level jobs in his own constituency. “People have been crying out for this,” they added.
Tánaiste Simon Harris had previously described the Government’s commitment to cut VAT for the hospitality sector as a “solemn” vow. He told his parliamentary party last month that the measure would be included in Budget 2026.
Speaking on Thursday, Mr Peter Burke said the Government has been very clear about “one sector” and that “hospitality is going to get a reduction on VAT”.
“The sector employs about 228,000 people, many of those jobs are in regional Ireland and are very much important to the rural economy and the regional balance,” he said. “I would also say that the sector is key to the absorption of the huge tourism sector, which is a €9 billion sector.”
Speaking on Thursday, Taoiseach Micheál Martin said he did not want to get into a “rolling commentary” on the proposed cut in Vat on hospitality, or what would be in the budget.
The Government would have to look at what was possible closer to budget day, given the current uncertainty over US tariffs on trade.
“The backdrop is tariffs, we have to assess this closer to budget day, in terms of what’s possible, [and] what’s not possible,” Mr Martin said, when asked about the Vat cut. He was speaking in Luxembourg, where he was meeting the prime minister of Luxembourg, Luc Frieden.
