Matt Shanahan (Waterford, Independent) | Oireachtas source

I thank Deputy Fitzmaurice and his colleagues for bringing forward this motion, which speaks to support for all of the SME sector. Across the sector, there are significant challenges for SMEs, retailers, hairdressers, beauty salons and all service providers, as we heard on the streets yesterday. There are specific challenges for the food and hospitality sectors. This motion is calling for a reduction or some easement of the VAT rate, which is now critical.

The one thing that these business have in common and the one challenge they all face is the rise in costs, many of which are attributable to Government actions. Minimum wage increases, sick pay, parental leave and auto-enrolment in pension schemes are laudable and we want them, but we must also give support to businesses and recognise that they cannot carry all of the costs that are being put onto their trading accounts. The only way they can cover those costs is by increasing the prices. As soon as they do that, they see an impact to consumption and to their turnover. There have been increases in the costs of utilities. We heard yesterday that food costs for the hospitality sector have increased by more than 200% in the past two years. The cost of utilities has increased by 100%. All energy costs have increased by 100%. Bureaucracy is another significant problem that businesses are facing, all thanks to Government Departments.

There is an ironic element to the budget. When the Regional Group put forward its pre-budget submission, we asked for the VAT issue to be addressed for the food sector. We put forward the novel suggestion of a stepped VAT change based on the turnover of a business. The position of the Government was that it did not have the money and could not do it. Yesterday, it magically found €1 billion to fund the investment shortfalls in the Department. The point is not lost on people in the small business sector.

The Minister of State will have heard that over 600 restaurants closed in 2023 due to the reinstatement of the 13.5% VAT rate. More than 1,000 businesses have been identified. A key message that went out yesterday was that for a restaurant with a turnover of €1 million, the increases in the most recent budget have resulted in an extra €96,000 in costs. For a business with a turnover of €500,000, we can extrapolate an additional cost of approximately €42,00 or €43,000. I guarantee that none of those businesses are making and retaining €40,000 in their businesses.

More than 270,000 people are employed in the hospitality sector. These are the ones who are primarily being hit. Amazingly, those in the regions are being hit most especially. This is about our future tourism offering and our community cohesiveness. It is about what makes the Irish tourism experience unique. What will people come to Ireland for in the future if we close these indigenous businesses? As someone said yesterday, the Irish pub will be an attraction that people will go to the Continent to see in the future. That is the way we are going. I ask the Minister of State to consider doing something with the VAT rate.

I remind the Minister of State of the lack of participation of the SME sector at the Labour Employer Economic Forum, LEEF. That is an issue I have raised for the past four years. There is still no tacit recognition that the small business sector is not being brought into discussions and that decisions are being made without the input of those businesses, as happened the last time. Will the Minister of State make the decision to bring Irish Small and Medium Employers, ISME, onto the LEEF so we will have some representation in that area?

I will make one other key point. What direct experience of running a business have the people in the Departments? I do not think they have any experience on the basis of the decisions they are making. As I said before, I ask the Minister of State to consider a specific agency to look after the SME sector. We have Enterprise Ireland for indigenous exporters. We have IDA Ireland for foreign direct investment, FDI. It is no good saying that the local authorities and local enterprise offices, LEOs, are providing. They are doing what they can at ground level but we need a national agency as soon as possible to cover off the SME sector.

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