Marian Harkin (Sligo-Leitrim, Independent) | Oireachtas source

I thank Deputy Fitzmaurice for drafting this motion, which I fully support. The motion proposes maintaining the 9% VAT rate for the hospitality sector. This is in the wider context of the huge increases in the past 12 to 18 months in the cost of doing business but specifically this morning, we are looking at the 9% VAT rate. In that context, let us look at our VAT rate on hospitality in comparison with our EU colleagues, that is, the people we compete with when it comes to tourism business and leisure business. Increased VAT rates have a huge impact on our competitiveness. Ireland's VAT rate of 13.5% on this sector is one of the highest in Europe. The Minister of State will know this. More than 70% of EU countries, including Italy, Spain, France and Portugal, have lower VAT rates on hospitality. Some of these are significantly lower. I put it to the Minister of State that Ireland is way out of line when it comes to VAT rates on the hospitality sector. If we reduced it to 9%, that would bring us right into the middle group where our tourism sector could compete. The Minister of State and I both know that. This is the reality of the situation. EU law allows us to implement lower VAT rates in certain sectors. I agree with what the Minister of State said earlier about certain parts of the country and so on. That would become a minefield and nobody wants that but the Government does have the power to reduce it in certain sectors, for example if there was economic difficulty or issues around businesses surviving. That is the situation we are looking at the moment so there is no issue from that perspective.

It is not just VAT rates. Consider our excise rates on wine and beer. Wine and beer are often sold in our restaurants. Ireland has the highest excise rate on wine in all of the EU and we have the second highest rate on beer. Therefore, the Government already has a huge tax take on wine and beer sales in our restaurants. On top of that, the Government slaps one of the highest VAT rates in the EU. This means that as a State our tax take from this sector is one of the highest in EU, if not the highest when food and drink are combined. It is, therefore, perfectly reasonable that we should ask the Government to reduce the VAT rate on the food sector to give these businesses a chance to survive. What we are asking is reasonable. It is not off the wall. It benefits urban and rural alike. I was horribly disappointed that it did not happen in the budget but a billion euro was found yesterday or the day before so maybe money could be found to reduce the VAT rate before we finalise the Finance Bill.

The second issue here is Government interference in the market. The Government has done this by: raising the minimum wage, which I fully support; by pension auto-enrolment; and the five days' sick pay, which will increase further. I fully support all of that but Ministers are claiming credit for it by saying "I reduced the minimum wage" when the credit should go to the employers who pay the increased salary. Ministers make a decision, which is the easy part, but when the State intervenes in the market it has a responsibility to prevent market failure because of its actions. That is what is happening here. Restaurants, cafés and small businesses are under serious pressure from increased costs mandated by the State. The State, therefore, has to act. I read through the Minister of State's contribution where he speaks of some of the supports that are there, and they are of small assistance, but yesterday at the protest I spoke to a restaurant owner from Sligo who has two restaurants with 45 staff. His increased costs for one year are in excess of €90,000. I spoke to a restaurant owner from Leitrim. He was not at the protest on his own but was there with five or six members of his staff and when they come to a protest outside Leinster House, this tells us that they recognise their very viability, the future of their restaurant and of many restaurants in the region, is seriously under threat.

I went through all the figures with the restaurant owner from Sligo. It is perfectly legitimate. The Government's €4,000 grant will be a help, and yes the Government has put in some measures, but just five minutes ago the Minister of State said it "may in some small part go towards paying a bill". It will but that is all it will do. It will not be enough to keep the doors of some of those restaurants open.

Deputy Fitzmaurice has given me some time to finish.

One of my main concerns is that many of the restaurants that are closing are Irish owned. They are indigenous, use local produce and are unique to their own areas. That is one of the reasons why we all go out to eat, for something different. It is one of the reasons why tourists enjoy going to Irish restaurants. Restaurants open and restaurants close - we know this, but the real risk is that the restaurants which are closing will be replaced by the chains. That is fine but if that is all we have then we are losing the uniqueness in our food offering. I can honestly say that I have never seen such anxiety and worry from small businesses as at the moment. They tell me they are on their knees and many are on the verge of giving up. There is still time to reverse this decision and I ask the Minister of State to seriously consider it. I thank Deputy Fitzmaurice for drafting this excellent motion where we get an opportunity to raise issues that are crucial nationally and regionally.

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