Eugene Murphy (Roscommon-Galway, Fianna Fail) | Oireachtas source

For a number of weeks I have said that this is a bad move for particular parts of the country. The argument has been outlined by a number of my colleagues. Where an establishment does not have the footfall, it will certainly suffer. There is no doubt that when the VAT rate was reduced to 9%, it had the effect of increasing employment, particularly in the restaurant sector. We found restaurants that otherwise would have not survived were setting up in small towns and villages and were able to survive. The message that is clearly coming back to me from those people is that some of them will close and some small hotels will reduce the number of staff.

We can talk about the hotel sector all day, but a lady running a family hotel told me that this VAT increase was the equivalent of two well-paid workers. While they may not be working full time, this measure will cost the owner almost €50,000 extra, so her intention is to reduce the number of staff. It is remarkable, because if any shop or business was surviving in rural Ireland, it was the hairdresser and the restaurant when many others had closed. The pity of this is that at the very time when we are talking about rural regeneration and putting money back into towns and villages, which I acknowledge, some of these businesses will definitely close. I said at an early stage that it was a retrograde step. I think it is wrong. I accept that we cannot have one tax in Dublin and a different tax in other parts of the country. I do not know whether something could have been done with regard to turnover but we need to do something about this because it will cost jobs, especially in rural areas.

This matter is causing concern to many small businesses. I know this because I still get representations about it weekly asking me whether anything can be done. I know there was talk about investing €35 million in the tourism industry. I do not know where that is and whether anything has been done to ease the sting of this measure. I do not know whether the Minister of State can tell us anything about this. We should remember that those businesses were hit hard in the rates review in recent years. Many of them had to pay extra rates on their small premises, so they have been hit pretty hard. I think it was Deputy Howlin who said earlier that many of them had to survive through hard years and had to make many sacrifices during that period. I would certainly support the comments of all my colleagues here. This must be kept under review. I would like to see something done with that €35 million to help those businesses that will struggle because of this.

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