Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

As the Deputy knows, the 9% VAT rate was due to expire in February 2023 and the Government took a decision, on an exceptional basis, to extend it for a further six months to the end of August 2023. It reverted to the normal rate at that point in time. That was the agreed position of the Government and remains the agreed position of the Government. To be clear in terms of where Ireland stands, because I have seen different commentary on this issue, Ireland's VAT rate on food services, cafes and restaurants is eighth in the EU at 13.5%. A further six countries have a rate of 12% to 13%. In other words, 14 countries have a rate of 12% or higher. The rate in Northern Ireland, over the Border, and in Great Britain is 20% compared with our 13.5% rate. Germany had a low rate of 7% during Covid-19. That expired and went back up to 19%. The main issue being raised with me by businesses at the moment is not around lack of demand, many of them are busy, but access to labour is a key issue. The consistent issue they are raising is the accumulation of various costs that have been imposed, some through direct Government policy decisions. That is an issue that we as a Government, collectively, across a number of Departments, have to take on board, have to reflect upon when it comes to future policy decisions over the period ahead. VAT was used on a number of occasions in recent years to stimulate demand. By reducing VAT, the price to the end consumer reduces and it stimulates demand. That is not the fundamental problem that businesses are facing now. The fundamental problem is a viability challenge because of the level of costs that they are incurring. That is the Government's position on the issue. We have debated a number of times this morning tax debt warehousing. I will shortly come forward with additional measures to introduce further flexibilities to support businesses, many of them in the hospitality sector. In total about €1.7 billion is owed in regard to tax debt warehousing. I will be finalising new measures with new flexibilities to support businesses that have tax debt warehoused.

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