Neale Richmond (Dublin Rathdown, Fine Gael) | Oireachtas source

I welcome the opportunity to respond to the issues raised. I acknowledge the protests which came to Dublin yesterday and I believe I met all of the representative bodies many times in dealing with this, including the local businesses in my own community.

I would like to acknowledge the role of the Cathaoirleach Gníomhach, Deputy Ring, in introducing the 9% VAT rate originally at a very difficult time for the sector, which he, as the then Minister of State, represented in government and the impact it had on the entire country as well as businesses in D4, even though neither of the Ministers are from D4, despite some of the colourful comments from others.

The Deputies across the Chamber have expressed the view that the 9% VAT rate should be brought back for the food hospitality sector and indeed made permanent. The Government is fully committed to supporting the food hospitality sector. The decision was taken, however, in budget 2025 not to reduce the VAT rate to 9%.

From the outset, let me be clear, I and indeed the entire Government are well aware of the pressures faced by the food hospitality sector. In my time in the Department of enterprise, I met with these businesses on a weekly if not daily basis and I still do. Indeed, most recently, I was in Cork city last Friday meeting businesses and all the representative bodies. The previous Friday and Thursday, I was in Tipperary and there is not a day of the week when I do not go into businesses in my own constituency, like any dutiful TD does.

I hear their concerns and I absolutely take them on board. The hospitality sector is vital, not just to our tourism sector and to our economy, but it is absolutely vital to our communities. It is the centrepiece for so many community endeavours and is the heartbeat of suburban, urban and rural Ireland in so many regards.

There is simply no denying that the cost of doing business has risen significantly over the past few years, driven primarily by energy costs and inflation. However, I do acknowledge the other costs arising from domestic measures such as changes to statutory sick pay and the transition to a living wage, which will have a particular impact on labour-intensive businesses such as restaurants. These measures have been roundly supported from nearly all sides of these Houses. Indeed many of the people criticising them actually welcomed their introduction at one stage.

There is, however, a very significant amount of work underway to mitigate the impact of these costs. In this regard, the supports the Government have offered, from tax debt warehousing, the increased cost of business grant, the recently announced power up grant and the changes to the VAT registration threshold are all having a significant impact. The increased cost of business grant saw €154 million issued in the first payments with nearly €90 million issued in the second payments tailored specifically to retail and hospitality businesses which we know are bearing the brunt of the increased costs. The first payment issued to just under 75,000 businesses and a further 38,000 benefited from the second round.

Deputy Shortall raised concerns as to whether there was a large undertake of this grant. There simply was not. By the end of the year we saw over 90% take-up of the grant. Businesses which had not taken it up had gone out of business or were not in fact eligible for it.

Earlier this month in budget 2025, a power up grant was announced which will be an additional grant for businesses. Some €170 million has been made available for the scheme in the budget. Under this scheme those retail and hospitality businesses that received a second increased cost of business grant will receive €4,000 into their bank accounts this side of Christmas. While we are fully aware that these grants do not solve many if any of the issues which businesses are facing, they may in some small part go towards paying a bill or an element of the wage bill those businesses face.

However, beyond grants and tax changes, one of the main ways the Government has worked not just for both the hospitality and tourism sector and the wider retail sector, but for the economy as a whole, is by trying to put more money into customers' pockets. That has been a focus of the Government's last two budgets. That is why the Government's budget announcement of €2.2 billion of cost-of-living measures targeted to provide additional income for households, is also support for the wider hospitality sector. As these measures take effect in the final quarter of 2024, the Government expects an increase in consumer confidence going into the busy Christmas weeks with a knock-on increase in spending within the hospitality sector.

We have also seen a consistent approach to changing the tax rates in the State, with another increase this year in the threshold before someone pays the higher level of taxation by €2,000 and a cut to the USC of 1%. These measures all put money directly into the pockets of Irish people and with greater spending power there is greater spending power within the hospitality sector.

The proposal made by the Deputies is that this will be a permanent VAT rate for the sector. The cost would reach the billions very quickly. The 9% VAT rate cost an estimated €1.3 billion between its introduction on 1 November 2020 and when the rate reverted to 13.5% on 31 August 2023. Do not get me wrong. This was money well spent and it was extremely important to do it but we do have to ask whether this is a viable, long-term solution for the sector and if it addresses the myriad concerns raised by vendors, restaurateurs and café owners, and the representatives in this House, in terms of the sector.

When making budget decisions about VAT or any other tax matter, the Government must balance the costs of the measures in question against their impact on the overall budgetary framework. The Government is committed to supporting businesses in these sectors but we have to ensure that the support we offer is targeted, sustainable and legal. A number of Deputies have asked previously, including in this debate, about the possibility of altering VAT rates for different parts of the country or to have a different rate for the same service in a different area. This is just not possible. It is forbidden by EU law and it is against the VAT code. We need to put some clarity and clear blue water between this and what is actually possible. The Government will, however, absolutely continue to support the hospitality sector and all of the businesses operating in it. We will also continue to ensure that taxpayers can spend their own money to support these businesses rather than relying on the Government to subsidise them on an ongoing basis. We will absolutely commit to constantly reviewing all measures and to constantly engaging with the sector through the representative bodies, through the individual business owners in our constituencies, and through the workers who work in the sector.

I want to put on record distinctly and clearly the value and importance of the hospitality sector to our economy and our society. I completely hear it. It was put to me quite bluntly on Friday by a number of people who work in this sector when I had that engagement with Senator Jerry Buttimer in Cork city centre. They said that they do not feel appreciated and not necessarily just about policy direction but also with the language used by Government Ministers and the language used by political parties of all sides, particularly when it comes to writing election manifestos in the coming weeks, or months, depending on what happens. I put it on the record of this Dáil that they are valued, they are appreciated and they are vital for ongoing success, not just for the economy but for the sheer functioning of communities around this country north, south, east and west.

I will conclude by genuinely thanking the Deputy for placing this motion. I fully understand the importance of this matter, not just to their constituencies in the north west but to every constituency across this country and to every business operating in this sector regardless of size or the offering they have. The Government is absolutely committed to supporting the sector and over the next weeks, months or whatever happens in the future, we are more than committed to working with Deputies Harkin and Fitzmaurice as individuals and as part of their wider political group to address the concerns they have to see where we can provide meaningful and viable solutions on an ongoing and multi-annual basis.

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