Mattie McGrath (Tipperary, Independent) | Oireachtas source

The Minister of State mentioned that a review was carried out last year. Will he elaborate on what was reviewed and who carried out the review? He also mentioned that pockets of rural Ireland are doing very well. They are very scarce pockets because I do not know many areas that are doing well. In my constituency, there are many cottage industries providing bed and breakfast services and catering services, such as the Carraig Hotel in Carrick-on-Suir, Hotel Minella and Leisure Centre in Clonmel, Cahir House Hotel in Cahir and Great National Ballykisteen Golf Hotel in Tipperary, and hairdressers, that will be impacted by this increase. I hope it does not affect the beauticians or they will have to charge extra for the snake oil.

In regard to the review, there are pockets of Dublin where the hospitality is not doing well, with many establishments forced to sell a two-course meal for €10 to try to encourage customers in. That is a fact. I was in one such place recently. I could not believe the prices being charged. However, rural Ireland is most impacted. The reduced VAT rate was introduced by former Minister for Finance, Deputy Noonan, and former Minister for Public Expenditure and Reform, Deputy Howlin, for good reason. I accept it was to be a short-term measure but it proved to be successful. It was the spark that started new businesses and helped others to remain open.

The Minister of State said there had been a review of the reduced VAT rate. Was consideration given to an incremental increase to assist the people mentioned by Deputy McGuinness who have made five-year plans, who have taken out loans from banks to generate their businesses, and who need to service their debt? It is fine for the Minister of State to say that the cost of a coffee and a scone will increase by only 22.5 cent, but the increase on functions such as weddings, birthday parties and bed nights will be greater. We are supposed to be the Ireland of a thousand welcomes. This is the basis on which many in the hospitality sector operate. The reduced rate helped them and it also helped new businesses to get up and running. It helped to regenerate villages and towns. The increase is a slap in the face for all of those people and businesses. It is a huge increase, amounting to almost 40% of the cost. It is too much too quick. The tourism sector and our fledgling cottage industries will not be able to sustain this increase. We need a review mechanism.

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