Vat increase ‘will sink’ West Cork businesses

THERE is a palpable fear and uncertainty among those in the hospitality sector in West Cork, following the government’s decision to increase the vat rate from 9% to 13%, a move described by one local TD as ‘reprehensible’.

Speaking to The Southern Star, Liam Edwards of Jim Edwards Bar and Restaurant in Kinsale said that while the decision to increase the rate was expected, it is still very disappointing.

‘We have no choice but to pass this increase onto the consumer. We have absorbed huge increases in overheads in the last few years, including energy, wages, and food produce – which have increased in some cases by a third,’ he said.

‘Our margins have gotten tighter and tighter and the last thing we want to do is increase our prices heading into the off season. We are faced with a lot of fear and uncertainty in the viability of our businesses.’

Neil Grant of the Celtic Ross Hotel in Rosscarbery said the timing of the vat increase, particularly for rural Ireland, is ‘shocking’.

‘We are entering the toughest – and often loss-making – months of the year in hospitality. This increase will endanger some smaller hospitality businesses and will certainly result in further inflation as businesses cover the substantially increased cost of doing business,’ he said.

Dave O’Halloran of The Lifeboat Inn in Courtmacsherry feels it is time for the government to separate accommodation from the food and beverage industry in hospitality.

‘This vat increase is coming at a really tough time for restaurants as we’ve had a rough couple of years. For the last six months we have been trying to absorb as much of the increases between energy, food costs, and labour and we’re not in a position to absorb any more costs,’ he said.

‘There is just no way I can cut my margin anymore and I think a compromise could have been found. It’s time to separate food and beverage from accommodation.’

Mary Ann O’Donovan of The Old Creamery in Kilcrohane said despite the vat increase it would be unfair of them to increase their prices at this time of the year when the season is slowing down.

Meanwhile, Neil Lucey of the Gougane Barra Hotel said it must be made clear to consumers that any price increases is due to the government and not the hotels.

‘Customers will be confused with this, thinking businesses are increasing prices for their profit, but this is a direct government increase and not by us.’

The Restaurants Association of Ireland (RAI) described the move as ‘nonsensical’. They say it will close the doors of many low-margin restaurants, cafés, and food-led pubs.

‘The increase is wrong at a time when the country needs to reduce inflation, a vat increase only adds to inflation. The increase in the vat rate is the final nail in the coffin for many small cafés, restaurants, and food-led pubs.’

Cork South West Independent TD Michael Collins said imposing the tax increase on restaurants and other eateries at a time when these businesses are struggling to survive amidst significant cost increases in energy, food, and labour is nothing short of ‘reprehensible’.

‘Rural tourism deserves special consideration and should not be penalised for the price-gouging tactics employed by certain Dublin-based hotels during “compression nights” or major events that drive up demand and prices,’ he said.

‘The 9% vat rate should have been retained for the food sector. These tax increases will force more people into poverty,’ he claimed.

He also criticised the hike in fuel for motorists, calling it a ‘mini budget’ tax grab from motorists.

‘The latest round of increases means an additional €10 per tank, pushing prices beyond €2 per litre this winter, with another carbon tax hike on the way next month.’