THE GOVERNMENT HAS held firm on plans to scrap the lower rate of Value Added Tax (VAT) for the hospitality sector.
Announcing Budget 2023 today, the Minister for Finance Paschal Donohoe reiterated that the VAT rate for pubs, restaurants and other entertainment and tourism businesses will stay at the special reduced rate of 9% until the end of February next year.
VAT for the sector is then set to return to 13.5%.
Representatives of the hospitality industry said the budget announcement was a blow for the food and tourism businesses.
Adrian Cummins of the Restaurants Association of Ireland said: “Input costs continue to rise, including food costs and energy consumption will only increase during winter months. The 9% VAT rate ending in February of next year will only increase costs for consumers and raises concerns about Ireland’s competitiveness compared to our EU counterparts.”
The 9% rate was introduced in Budget 2021 and extended in Budget 2022. The government said the estimated cost of the scheme was €652 million.
Newspapers and health products
Minister Donohoe told the Dáil today that VAT was being scrapped entirely on newspapers and various health products, including defibrillators and hormone replacement and nicotine replacement therapies.
“The government is aware of the critical role that newspapers play in our society, from reporting on local communities to holding those in power to account. For that reason I will be reducing the VAT on newspapers from 9% to zero from 1 January 2023,” Donohoe said.
The Fine Gael minister said the policy is part of the government’s commitment to support an independent press and is in line with the Future of Media Commission’s recommendation on the matter.
The Irish Heart Foundation (IHF) welcomed the news that the VAT on defibrilators is to be scrapped, saying it will save lives.
“The earlier an AED is used, the better a person’s chances of surviving a cardiac arrest. The decision to remove the 23% rate of VAT on AEDs is a victory for common sense. More lives will be now be saved as a result as they will become more accessible to clubs and community organisations,” said IHF’s director of advocacy Chris Macey
Donohoe also announced that the lower 9% VAT rate for electricity and gas was extended until 28 February next year.
Budget 2023 also includes an increase in the income tax standard rate cut off point to €40,000, a rise of €12 per week in social welfare payments and a once-off double week Cost of Living Support payment to all qualifying social protection recipients.
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