Brendan Howlin (Wexford, Labour) | Oireachtas source

Deputy Noonan and I were the Ministers who introduced the reduced VAT rate and we did so for a purpose. It was not related to taxation but to what we could do to stimulate job creation at a time of mass unemployment, with unemployment approaching 500,000 at the time. It was felt that the most beneficial thing we could do was to reduce the VAT rate on the hospitality sector. The reduction worked spectacularly well. However, it was due for review as it was not meant to be a permanent decision.

Nobody in this House would argue against increasing the rate for the large hotel chains which are coining money. The decision we made in 2011, in the first 100 days of that Government, was a job creation measure. We included vulnerable sectors such as hairdressers and barbers at the time but these are not being exempted from the increase. As a once-off increase of 4%, this measure will have a very significant impact on sole-trader barbers and hairdressers whose margins are tight already. The least we can do, since we on this side cannot table amendments to change the VAT rate, is to have the impact of this measure reviewed, hopefully before people are driven out of business, in order that we can see if the 13.5% rate is a viable rate for this very vulnerable sector.

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