Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance) | Oireachtas source

I thank the Rural Independent Group for bringing forward this motion on the hospitality and tourism sector. We are all aware of the employment contribution this sector generates and its importance to our wider economy and to many local areas. In Dún Laoghaire, we have many small businesses such as coffee shops, restaurants, independent food retail outlets and so on, many of which periodically find themselves struggling to stay afloat.

It is welcome that we will have a discussion on this issue and look at how we can ensure we maintain this employment and these small businesses that contribute to the vitality of our cities, towns and villages. It is an important discussion to have. I am certainly open to looking at the question of the VAT rate to see if it can make the difference. I must be honest, however, and say I am not sure it is going to make the difference those advocating for this change are suggesting it will.

The motion claims that by reducing the rate of VAT we will boost demand. Presumably, the implication is that prices will be lowered and, therefore, boost demand. Whether this was or was not the case, I am not entirely sure this is what happened when we reduced the VAT rate previously. I am not sure there was a significant reduction in prices. In fact, anecdotally, I would certainly say there is no particular evidence of prices having gone down. If businesses are genuinely struggling to survive, I could understand that the benefit they might get from a VAT rate reduction might not be passed on to consumers in terms of lower prices precisely because these businesses are struggling. I am not sure, therefore, that reducing the VAT rate will achieve the aims the proposers of the motion are suggesting it will.

I was struck by the figure the Minister of State mentioned in terms of what it would cost to reduce the VAT rate, some €750 million. That is a lot of money. If this is the sort of money we are talking about, one question the proposers of the motion and anybody serious about this issue should ask is whether there might be better ways to spend €750 million that would actually help small businesses and guarantee their viability. I ask this because the downside to what the proposers are suggesting is precisely that some of the very big and profitable multinational chains and other business chains are not struggling. In fact, in many cases, these are the ones putting great pressure on the small independent businesses. These large business chains are crushing them but they are highly profitable. These large businesses, however, will significantly benefit because this proposed measure is a universal one.

I empathise with where the proposers of this motion are coming from, but they need to think this proposed measure through. Is it actually going to achieve what they and I would like to see it achieve? Will it specifically help the small independent businesses that are often being crushed by very big businesses making huge profits that can cut prices and so on? Our view for a very long time, for as long as I have been in this House, and I note others are now saying this too, has seen us advocating for a change in the rates system. We have been advocating that we should have differential rates. I refer to the idea that a small business, whether it is a butcher, a baker, a candlestick-maker, a small coffee shop or whatever kind of small business it might be, is charged the same level of rates per square metre as huge multinational corporations or even banks. When I think about it, a bank might often have a relatively small premises whereas a restaurant has a big premises. The bank, however, will be making enormous profits while the small little restaurant or coffee shop will be struggling to survive. Yet these businesses are paying the same rates per metre squared even though one is hugely profitable and the other is struggling to survive. This makes no sense to me.

While I do not claim to know the details, my understanding is that in France, for example, there is a systematic policy of favouring the small independent businesses in towns and villages over the big chains and corporations making profits. Our view, therefore, is that we should have a differential rates scheme based on turnover or profitability so that we would help the small independent businesses as opposed to the big businesses that could afford to pay bigger contributions in rates.

The other area involved here concerns energy costs. Again, we have been arguing this point for years, especially in the context of the huge hikes we have seen in energy costs and the massive profits being raked in by the energy companies. These companies have been making enormous profits while businesses and households have been absolutely hammered with energy price hikes. This situation should be dealt with. We have argued that we should control the prices of energy and put caps on them. By the way, this is allowed for in the consumer legislation. It allows for caps to be put in place in particular areas where there is a crisis or an urgent need to do so. This is something that could be done. Similarly, regarding insurance, while there have been some improvements, this is also a huge source of costs and a burden.

The other thing I would ask those advocating for small businesses to consider is to not go down the road - and I know many do not - of thinking that perhaps slowing down on the moves towards implementing the living wage or increasing the minimum wage will somehow be good for them. The truth is that if what is being talked about here is increasing footfall and demand, the biggest source of that demand is the workers themselves. If the workers are on low pay, they will not then have the money to go into the restaurants, the coffee shops and other businesses. These workers are the biggest customer base for many of the small businesses in towns and villages. We should, therefore, embrace improving the wages and conditions of the tens of thousands of workers who work in this sector, which is characterised by low pay, poor conditions and so on. This is cutting off your nose to spite your face. Providing better wages and conditions for the workers would mean they would have more money in their pockets and would spend it in the small independent businesses in their cities, towns and villages.

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