Thomas Pringle (Donegal, Independent) | Oireachtas source

I move amendment No. 141:

In page 55, to delete lines 27 to 32 and substitute the following: “(b) by inserting the following after 13(3) in Schedule 3 of the Principal Act:

“(4) Beautician services”,

and

(c) by inserting the following paragraph after paragraph (ca):

“(cb) during the period from 1 November 2020 to 31 December 2021, 9 per cent in relation to goods or services of a kind specified in paragraphs 3(1), 3(3), 7(b) to (e), 8, 11 and 13(3), 13(4) of Schedule 3 on which tax would, but for this paragraph, be chargeable in accordance with paragraph (c);”.”.

This is very straightforward. Changes have been made to VAT to support hair salons during the current Covid-19 restrictions. These have benefitted hairdressers but not beauticians. This is causing a real problem. As many beauticians share the same premises as hairdressers and the two professions go hand in hand, the measure should include beauticians. I know that may have a knock-on effect in other areas, but it would make sense.

In recognition of the challenges facing the hospitality and tourism sector, the section provides that the 9% rate of VAT applies from 1 November 2020 to 31 December 2021 to the supply of certain goods and services which primarily relate to the hospitality and tourism sector and which are currently subject to a VAT rate of 13.5%. The 9% rate of VAT will apply to the supply of restaurants and catering services, guest and holiday accommodation and various entertainment services such as admissions to cinemas, theatres, museums, fairgrounds and amusement parks. It will also apply to hairdressing services and certain printed matter such as brochures, maps and programmes. It is estimated that this change will cost the Exchequer €336 million in 2021 and €401 million in total.

The VAT rates applying to Ireland are subject to the requirements of EU VAT law, with which Irish VAT law must comply. Under EU law, there are a limited number of areas where a reduced rated can be applied, and these areas are set out in the third annexe to the VAT directive. Beauty salon services are currently liable for VAT at the rate of 13.5%, as services consisting of care of the human body under paragraph 21(1) of Schedule 3 of the Value-Added Tax Consolidation Act 2010. This rate is provided for under Article 118 of the VAT directive. It is not possible to reduce the rate of VAT applying to those services to 9% because for those services, the applicable VAT rate cannot be reduced below 12%.

My Department will continue to monitor the economic impact of the pandemic and in the event that we identify another sector where a reduction is possible, and where such a reduction could be a critical factor in sustaining businesses and jobs, we will consider that case. What we have done with VAT has to be considered in the round of all the other measures that have been put in place to support the economy and the beauty sector, including measures such as the CRSS and the employment wage subsidy scheme, for which the beauty sector qualifies, despite the fact that it does not qualify for this change in VAT.