The Restaurants Association Of Ireland welcomes VAT Retention at 9% in Budget 2015

• Budget 2015 gives much needed assurance of continued job creation with retention of VAT at 9%
• RAI welcomes government decision not to increase Excise

The Restaurants Association of Ireland (RAI) today praised the Government’s decision to retain the 9% VAT rate on tourism services in the Budget 2015 announcements. The Association however is discontented by aspects of Budget 2015 that will have a negative impact on the restaurant sector.

Adrian Cummins, Chief Executive of the Restaurants Association of Ireland, said that “In our Pre-Budget Submission, we set out objectives that we wanted met, namely the retention of VAT at 9% into 2015 which has been guaranteed. VAT at 9% into 2015 is crucial, not only to the sustainability of restaurants and businesses in the tourism sector, but also to job creation and regrowth for our economy.” 

As outlined by Minister for Finance, Michael Noonan, in the Budget 2015 announcements, “this initiative is delivering”.  The success of the lower rate of VAT is evident in the 34,052 new jobs that have been created since its introduction in 2011 and in the savings to the Exchequer of €699.72 million in the past three years.

“This is the correct decision by the Government; it keeps Irish tourism competitive, attracts overseas visitors and most importantly allows for the creation of a further 50,000 jobs in the tourism and hospitality sector in the upcoming years” says Adrian Cummins.

While the retention of VAT at 9% has been a huge positive for the industry, there are aspects of Budget 2015 that will have a negative impact on the tourism sector.

The Restaurants Association of Ireland is pleased that Government have not placed any further increases on alcohol excise, as the industry has felt the blunt of excessive increases in the previous two Budgets.  This decision not to reverse excise on alcohol, however, is a missed opportunity to create further jobs and increase overseas tourism visits to the country. The high cost of alcohol when dining out is one of the main reasons tourists will not return to Ireland, therefore the RAI calls on the Government to reverse excise on alcohol in next year’s Budget in order to improve tourists perception of value and increase visitors to Ireland.

Adrian Cummins, Chief Executive of Restaurants Association of Ireland, said “In their move to not reverse Excise Duty, theGovernment have actively ignored the RAI’s motion to have the below-cost selling of alcohol in supermarkets and off licenses tackled, which was put forward in our Pre-Budget 2015 Submission. They have missed an opportunity to further the growth of the tourism industry”

President of the Association and restaurateur Pádraic Óg Gallagher, says that “The Government have seized an opportunity to build on momentum gained through increased tourism numbers from the year of the Gathering. We’re delighted that the Government have seen the positive effect that the 9% VAT rate has had on our industry and we will continue to build on this tourism growth in 2015.”

Chef Training remains a priority for the Restaurant industry and the Association was disappointed to see that no training initiative was outlined in Budget 2015. In order to meet the demands of further tourism growth and job creation, investment in Chef training should be given the utmost priority. Job positions are there but the skilled workforce are not. In its pre-budget submission, the Restaurants Association of Ireland proposed 1,000 Apprenticeship places in the restaurant sector with participants allowed access to training allowances equal to those given to FÁS apprentices. The Restaurant Association calls on the Government to focus on training in 2015.

The Irish restaurant industry employs 72,000 people (1 in 4 tourism jobs) and contributes €2 billion to the Irish economy each year.

• Irish restaurateurs pay the highest catering wage rate in Europe
• Ireland has the highest excise duty on wines in Europe
• Irish food costs inputs are 18% above the European average

(‘Cost of Food Preparation Report’, commissioned by Fáilte Ireland)

Adrian Cummins, Chief Executive of the Restaurants Association of Ireland, said that the budget that was delivered today would bring a mixed response from the industry. Positive gains from the VAT retention would be levelled out by the negative effects of failing to reverse excise duty.