TAX CUTS DESIGNED to prop up the hospitality industry should be axed because businesses haven’t been passing on the savings to their workers or to customers, Ireland’s biggest trade union has said.
But business groups have rejected the claims as nonsense with all of the evidence suggesting the special VAT rate given to hospitality businesses created jobs, reduced prices and drove government revenue.
SIPTU, which represents about 200,000 workers across various industries, wants the 9% special VAT rate introduced in 2011 for the hospitality sector to be dropped if employers refuse to join talks about new conditions for staff.
The union said it will release an “information survey” later today which would back a call for Finance Minister Michael Noonan to put the reduced tax rate back up to 13.5% as the “real financial benefits” of the cut had been kept from customers, employees and the state.
SIPTU divisional organiser John King said employers had been refusing to take part in talks to set fair wages and conditions for workers in hotels and restaurants.
“Employer bodies, the Irish Hotels Federation and the Restaurants Association of Ireland have recently complained of a shortage of skilled labour to meet the demand arising from these positive industry figures for the sector, including of chefs,” he said.
“However, their insistence on driving down wages and conditions of employment over the past five years has contributed to the shortage of qualified and skilled workers in the hospitality sector.”
More jobs but shrinking pay packets
The Restaurants Association of Ireland (RAI) released information in August which said the reduced VAT rate had created over 31,000 jobs since it was introduced, although less than 22,000 of these were direct jobs in the food and accommodation sectors.
It followed an earlier report from Fáilte Ireland which have the reduced VAT rate the thumbs up for cutting prices for customers, increasing tourist numbers, creating jobs and boosting state revenue.
RAI chief executive Adrian Cummins told TheJournal.ie said he had not idea where the union was getting its figures from as independent research had shown the VAT cut was a success in building jobs and reducing prices.
“We are trying to create jobs in this country and yet SIPTU have come out with this statement against the reduced VAT rate, which has been the greatest job-creation measure the current government has introduced,” he said.
However Recent Central Statistics Office figures revealed staff working in accommodation and food services had suffered among the biggest cuts in their average earnings between 2009 and 2013.
Pay packets in the hospitality trades were down 8.6% over the four-year period and the industry had easily the lowest earnings of any sector in 2013 with workers getting only €16,128 on average.
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