Robert Troy (Longford-Westmeath, Fianna Fail)

I thank the Leas-Chathaoirleach for welcoming me here today. I will not say it was the highlight of my week, but, anyway, I am glad to be here to engage with the select committee on such important legislation.

Deputies O'Callaghan and Deputy Nash are opposing this section. If the section were to be deleted, it would result in the VAT rate on food and catering services and hairdressing remaining at 13.5% in July next year and negate the budget 2026 decision to provide for the reintroduction of the 9% rate for these services.

In light of the continuing cost pressures on businesses and the importance of maintaining competitiveness in the hospitality and personal services sectors, the Government has now concluded that the 9% rate is appropriate for long-term stability in these sectors. As outlined in the budget speech by the Minister, Deputy Donohoe, the objective of the measure is to support businesses in the services sector that are facing increased cost pressures. The measure is expected to support over 150,000 jobs in the various sectors across the country.

The available CSO data for these sectors indicate that over 99% of the businesses are SMEs, with over half of them being micro-enterprises with fewer than ten employees. Regarding the benefit of this measure, the available data suggest in the region of 85% of the benefit will go to SMEs.

On the point made that the sector is not under pressure, between January 2024 and March 2025, 675 hospitality businesses closed. The number of businesses that have availed of debt warehousing in the sector is the second highest of any sector. In the region of €180 million in debt is warehoused, representing 1,453 employers and 41,000 employees. That very much signifies a sector that is struggling.

The Government has not abandoned indexation. It is very clear that it remains a commitment in the programme for Government. However, not all commitments in a programme for Government are introduced in the first year of a Government cycle. There are four more budgets to be introduced. The measures will be dealt with in subsequent budgets. The Government’s priority in this budget was to protect and maintain jobs so we would have a stronger economy in subsequent budgets, allowing us to invest in other areas.

This measure is primarily about the hospitality sector. Coming from a rural constituency, I know that sometimes hospitality-sector jobs are the only ones available in some of the smaller villages and other areas we represent. This may not be an issue for Deputies representing larger urban areas, but in rural constituencies the hospitality sector provides some of the few available jobs. There may be four or five jobs, and they are very important.

The hospitality sector is also important in supporting our tourism industry. The village I come from, which Deputy Nash will know well, his former colleague having represented it for many years, is Ballynacargy. The greenway has opened there and extends to Abbeyshrule. The associated businesses are providing real jobs in the rural community. They are supporting the work being done by Fáilte Ireland to create jobs in the tourism sector also. When you bring tourists to an area, you at least need to be able to feed them in a restaurant or a café.

I accept that ideally it would be great if we could exclude multinationals from this measure, but the Deputy is acutely aware that this is not permissible. The reality is that the vast majority of those who benefit from this measure are SMEs. A significant proportion of these are micro-enterprises with fewer than ten people. The areas that will benefit most significantly are rural areas.