Carol Nolan (Laois-Offaly, Independent) | Oireachtas source

It is unclear just how many times a sector has to sound the alarm before it is taken seriously and listened to by the Government. Time and again, those working in hospitality, tourism and retail have emphatically made the point that they are facing imminent and widespread closures caused in part by the reintroduction of the 13.5% VAT rate. We know from a survey conducted last week with 180 members of the Restaurants Association of Ireland that a staggering 86.7% consider the 13.5% VAT the greatest threat to their viability. Some 73.9% said their businesses will be closed by this time next year if the 9% VAT rate does not return. Some 67.2% of the members said they would already have closed their business if it were not for the ongoing VAT 9 lobbying campaign.

This is a real crisis that is being made immeasurably worse by the stubborn and, frankly, incomprehensible unwillingness of the Government to address this key issue. I do not understand the rationale behind the refusal and would like some clarity so I can understand the point of view of the Government side. The fact is these businesses create much employment in urban and rural areas. They need to be protected. If we are to protect jobs, we need to ensure our restaurants are protected and allowed to operate with a fair VAT rate of 9%.

We know the Government has initiated several measures to support businesses, which is welcome, but unfortunately it is not enough. It is a bit like giving a patient something for his or her headache while leaving his or her broken legs untreated. I know from the responses to parliamentary questions I have submitted to the Minister for Enterprise, Trade and Employment that there have been 957 submissions from small and medium-sized business owners in Offaly for the Government's increased costs of businesses, ICOB, portal. The total number of properties involved is 1,068, while there has been an almost equivalent number for County Laois. This highlights the ongoing economic shocks being felt by retailers and small business owners. The failure of Government to reduce the 13.5% VAT rate to 9% is a move considered of critical importance by many within the retail and hospitality sectors. While I am sure that almost 2,000 small businesses in counties Laois and Offaly appreciate the support from the ICOB scheme, what we need is an immediate change to the VAT rate and escalated efforts to reduce the cost of energy. Both those factors are major drains on small enterprises operating on razor-thin margins.

I talk to small and medium-sized business owners on a daily basis and they tell me the same thing. Tinkering around the edges with schemes and supports may assist them in the short term but the avalanche of costs will keep coming long after the support schemes have been closed. Businesses need to be able to plan, going forward. They need to know that input costs, such as those for energy, and outgoing costs, such as those required by increased VAT rates, will not wipe them out. I have spoken to many employers who feel utterly demoralised by the cost burden of trying to operate and to keep their doors open.

It is time this Government got real about the nature of the very serious threat these sectors are facing. We know from the Restaurants Association of Ireland research, conducted by the economist Mr. Jim Power, that the economy will lose up to €288 million annually as a result of the closure of more than 200 restaurants, cafés and other food-led businesses so far this year. We also know from this particular analysis that every time one firm closes its doors for good, it could result in the State losing out on a total of €1.36 million in value each year and in 22 people, on average, losing their jobs. In this sense, we can truly say without fear of exaggeration that the increased VAT rate is acting like a slow-release poison in the body of Irish SMEs and tourism. Government policy is killing the patient. Worse still is the fact that the Government has the antidote to this poison but will not use it.

What is profoundly distressing to many of these businesses is the fact that the warnings were so clearly laid out. This is not some unforeseeable crisis we are dealing with. In fact, immediately following budget 2024, the Restaurants Association of Ireland and others within the various sectors made the consequences of the Government's policy approach crystal clear. In October 2023, the association stated that budget 2024 failed to deliver enough significant measures to support small and medium-sized food-led and hospitality businesses across the country, adding that business closures will occur as a result of the Government's lack of meaningful action. What did the Government do in response? Did it offer certainty by implementing a semi-permanent 9% VAT rate that would have enabled critical future planning and certainty within sectors already beset by globally high levels of energy prices? No, it did not. In a sense, it cut off its nose to spite its face. It devised and implemented supports and various schemes while leaving the key issue unaddressed.

There are approximately 18,670 active businesses within the midland counties of Offaly, Laois, Longford and Westmeath. They employ approximately 72,467 people across the region. The Minister is well aware of the challenges entirely unrelated to the crippling level of VAT that many of those businesses are facing. In the broader context, we have known for years now that despite Ireland's reputation as one of the world's most globalised economies, the majority of private sector workers are employed by indigenous, non-exporting firms and SMEs. The Government was at one point capable of recognising how these numbers highlight the importance of domestic demand for sustaining and generating employment within the SME sector.

This is not rocket science. No sector can survive the endless onslaught of high VAT rates and energy costs. Cash reserves and savings are being poured away just trying to stay afloat, pay wages and keep doors open. The solution is here before us. It merely requires political will. It is way past time to signal the end of the 13.5% VAT rate. If the Government fails to do this, I have a request to the Minister of State. Will he come with me to speak face-to-face to the many business owners across Laois and Offaly who are about to call it a day for their businesses and dreams? Will he explain to them why those dreams are being sacrificed for a policy that makes no sense socially or economically?

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