Mattie McGrath (Tipperary, Independent) | Oireachtas source

I move amendment No. 27:

In page 134, between lines 1 and 2, to insert the following:"Impact of VAT increase on hospitality sector

45.The Minister shall, within 6 months of the passing of this Act, prepare and lay before the Oireachtas a report analysing the impact that the increase of VAT to 13.5 per cent has had on the hospitality sector, with particular regard to small businesses.".

The Government's decision to increase VAT on the hospital sector will have a devastating negative impact, especially on small businesses, throughout the country, including, strangely enough, the capital city where we all pay high prices for hotel rooms. Smaller businesses, both here and at remove from the city centre, will be significantly impacted by this measure. The reduced VAT rate was a welcome and necessary move at the time and it is still necessary.

I compliment Deputy Wallace, who apologises for his absence, on tabling this reasonable amendment. It requests that an impact assessment of the VAT increase on the hospitality sector be carried out after six months. This is seldom done in legislation.

This is a major issue, certainly outside the Pale. The reduced rate was bringing people back into hospitality businesses for food, drinks, etc., and generating business. It has proved successful. While we may have accepted a 1% increase in the VAT rate for the sector, reinstating the 13.5% rate is ridiculous. It was not expected by the industry as it had lobbied hard on the issue.

The Minister of State, Deputy D'Arcy, must know that restaurants and other parts of the hospitality sector are on their knees and struggling. The reduced rate was a big help to the sector because people started going out again in towns and villages, as well as the islands and other tourist areas, many of which had become economically depressed.

We want an impact assessment conducted on this measure. The adage, live horse and get grass, comes to mind. In the earlier discussion, it was live horse and get food supplements or snake oil. I do not think we will get grass, however, because we never do.

This was a foul and foolish move. As I said, the Minister could have decided to incrementally increase the lower VAT rate or made clear that he definitely intended to raise it to its previous level. However, to make this change in one fell swoop on budget day with immediate effect is regressive. The current rate benefitted everybody, including small enterprises and their employees, the self-employed and Revenue through the increase in the tax take generated by different businesses. It was a foolish move to go backwards in one fell swoop.

The Minister should at least give a commitment to conduct an impact assessment. I accept that will be difficult because it is a case of Dublin versus the rest of the country. As I said, there are small enterprises such as restaurants outside Dublin city which are also struggling. It is having a serious negative impact on the whole hospitality industry. Some self-employed people will go out of business, which will have knock-on effects such as job losses and a loss of revenue from PRSI and other taxes. I appeal to the Minister of State to look at this amendment sensitively.

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