Mattie McGrath (Tipperary, Independent) | Oireachtas source

I thank colleagues for their contributions. Ar céad dul síos, gabhaim buíochas leis an iar-Seanadóir Brian Ó Domhnaill agus Triona O'Flynn in our office for putting together this motion. Tourism is a vibrant, dynamic sector that plays a vital role in Ireland's economy, as has been stated. It is the lifeblood of rural communities, providing employment and economic activity, including in locations where other industries may be absent. I also thank Adrian Cummins and his team for providing us with an up-to-date, as of yesterday, briefing on the perilous situation faced by many restaurants and food outlets.

Recent changes in Government policy and global events have put this vital industry under unprecedented strain. From 2011 to 2018 and again from 2020 to 2023, the hospitality and tourism sector enjoyed a reduced VAT rate of 9%. However, in September 2023, the Government restored the rate to 13.5%. The decision has had a significant impact on the sector and particularly on food-related businesses, which have seen insolvencies more than double in the first three months of the year. How much more clear evidence does the Minister of State want? He should talk to the Revenue. It will tell him. On principle, it is not being very lenient with people either.

The hospitality sector is broad and encompasses businesses such as hotels, bars, pubs, canteens, hairdressers, barbers, catering operators, hostels, bed and breakfast providers, caravan parks, self-catering accommodation and guesthouses. Many of us enjoy the scenic views between counties Tipperary and Waterford. People now come along with their mobile café units. These are of a very high standard and serve people in those remote areas. They have also sprung up in many towns.

Before the Covid-19 pandemic, in 2019, hospitality and tourism were among Ireland's indigenous sectors, generating more than €9 billion for the economy and employing an estimated 284,000 workers across 46,000 tourism-related businesses. That is not chicken feed. However, the Covid-19 pandemic and enforced lockdowns severely impacted the entire sector. As of the third quarter of 2022, the latest data shows a total of 246,000 people employed in the tourism sector and 170,000 in the hospitality and food services sector. The hospitality and tourism sector contributes significantly to the State's finances both directly through employment and indirectly through income tax and VAT. I fail to see that in the figures pointed out by the Ministers of State as to the cost of the request we are making here today. It is a timely request. As Deputy Michael Healy-Rae and others said, we are begging because these people are clinging on by their fingertips.

Excluding Denmark, Ireland's VAT rate of 13.5% for the tourism and hospitality sector is the highest in Europe. Why is that? Why do we have to be the highest or almost the highest in everything, whether fuel charges, transport costs or whatever else? One of the party leaders in the Minister of State's Government has announced he is to retire. I wish him well on behalf of our group but he piled a carbon tax on people as well.

The Government's reliance on the accommodation sector to provide temporary accommodation for Ukrainian refugees and asylum seekers has significantly reduced the availability of tourist accommodation and has increased prices. That is evident. Over the past two years, the Government has blindly taken over the accommodation sector. Some of my colleagues and I stay in the wonderful Martello Hotel in Bray. The Minister of State visited it with me once. I have to declare an interest. Cousins of mine own it. It is now the only hotel left in Bray. All of the others are being used as asylum and refugee centres. A person in junior infants would know that would have a massive impact on footfall and spend and it has. We were there last night. I could not believe it. The place was like some place out in the middle of the countryside of a wet Tuesday night. Last night was not wet. I could not believe the lack of footfall. The damage being done there is obvious and the Government continues to do it. At this point, a hotel in Clonmel is being taken over for an asylum centre. Hearn's Hotel is a famous hotel. Charles Bianconi set up his transport network there 100 years ago. We cannot learn from the past or from our mistakes. We are going down culs-de-sac.

The accommodation shortage, particularly outside Dublin, directly affects other tourism-related activity providers, resulting in an expected loss of €1 billion in revenue last year. The Minister of State has said our proposal might cost €600 million or €700 million but it would save these businesses. A closed business, gnó dúnta, is of no use to anybody. A place that is closed just becomes derelict and lowers activity in the whole of the town or village. The Government must promptly reduce the VAT rate for the entire tourism and hospitality sector to 9% considering the imminent summer tourism season and the sector's financial strains. These are evident. We cannot wait for the budget, whether that is in October or whether it is brought forward for electoral purposes, which is all the Government seems to worry about. These businesses cannot wait. Week by week, dozens of businesses are closing. The Minister of State knows that small businesses are the backbone of the economy.

Furthermore, the Government should consider varying VAT rates in the hospitality and tourism sector across the country to promote regional balance. This should include the introduction of a new radically reduced VAT rate of 5% for areas outside of Dublin. This would create a distinction between the VAT applied in rural areas and in the capital, ensuring that rural areas are subject to a VAT rate no greater than 5%. I have heard the Government's excuses as to why it cannot do it. I have heard some parties here who are supporting the motion, mainly on the left, tear it asunder for looking for this. Why can seven other EU countries do it if we cannot? What the hell is wrong with the Irish Government? We are told all of the time that we cannot do things because Europe will not allow it. Seven other European countries have different rates so why can we not? The Government is not codding the people any more. They know well that this can be changed if the Government wants to change it. As I have said, seven countries have varying rates.

The data we got yesterday from the Restaurants Association of Ireland and Adrian Cummins was excellent but stark. It is a case study on increased costs in 2024. It is very up to date. These people employed 22 staff and had a turnover of €1 million. This is what the Minister of State's Government has done to them. The 13.5% VAT rate increased costs for this business, which has a turnover of €1 million and employs 22 staff, by €37,000. Inflation in the wages of those 22 staff has totalled €36,000. Supply cost increases have cost the business €13,500. That is mostly thanks to the Government's increases in VAT and excise duties and taking off the rebates it had put on. Auto-enrolment is another nice thing the NGOs brought to the Government. It is penalising. Most of us in the Rural Independent Group are self-employed. We declare that. We have good relations with our workers. Auto-enrolment is going to add €5,000 to the costs of this business with a turnover of €1 million employing 22 people. I hope the Minister of State sees where I am going with this. Overhead costs have risen by €3,500 thanks to the Government and sick pay adds on another €2,000.

These are all lovely and dandy. They are rolled out with fanfare by the Government but they have a severe impact on self-employed people, the workers, movers and shakers who drive this country's economy and give employment from Carrick-on-Suir to Kilsheelan to Clonmel, out to Cahir and Clerihan, where the wonderful pub, the Final Furlong, is located, and on up to Cashel, home of the famed Rock of Cashel, and into west Tipperary and the famed Glen of Aherlow. Across Tipperary, small businesses are begging for help. This is the stark reality of what the Government has done to these people. This is the respect it shows them. The Minister of State offered to go to every community to meet people. He will be busy. If he does not go soon, he will not meet many because they will be imithe. Their businesses will be dúnta,finito, gone.

People employed in a business may dream of being self-employed and setting up a business to look after themselves, their family and their neighbourhood. They may dream of employing people and expanding to employ more people, providing jobs. The vast majority of small businesses do not have press like the workers in Aer Lingus are getting today about their big strike. They work collaboratively and help each other. These stark figures say that the Government has little respect for them. Revenue is not giving much latitude to the many businesses that are struggling at the moment. I heard a Government Senator on my radio this morning clamouring for this. It was all for show because he knows it will not be done until the budget. They cannot wait until the budget. It will be too late for many of these businesses. They cannot and will not wait. They would love to wait but they cannot. Their savings are exhausted and their mental and physical health are suffering trying to manage with limited staff. They are getting great co-operation from their staff, who support them and understand their struggles. Ní neart go cur le chéile is the old Irish proverb. I ask the Minister of State to think about that and to look after the businesses because they, in turn, will pour €1 billion into the Government's coffers.

It is short-sighted to say this would cost too much. It has worked in the past. As I have said, it worked from 2011 to 2018 and it worked again after the pandemic. The lower rate of VAT has worked and paid dividends. Some rogue people and big businesses did not pass it on but they can be weeded out. We know who they are. The ordinary people and the spirit of the Gael, of CJ Kickham and of the village must prevail. The Government is going to extinguish that spirit. It is going to extinguish those small businesses and then we will be in a far poorer place because the digitals, the Googles and the big data centres are not interested in small rural communities. They are not interested in the fabric of rural Ireland or in our culture, our heritage or our dúchas. I beg the Minister of State to do something about this VAT rate.

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