Brendan Griffin (Kerry, Fine Gael)
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64. To ask the Minister for Finance if he is concerned with the potential impact of the reversal of the 9% VAT rate to 13.5% for enterprises; if his Department has evaluated the number of jobs this measure could cost; and if he will make a statement on the matter. [9270/23]

Alan Dillon (Mayo, Fine Gael)
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I thank the Cathaoirleach Gníomhach for his co-operation.

Has the Department of Finance evaluated the potential for job losses that could result from the proposed increase in VAT rate from 9% to 13.5% this September, especially in the services sector which employs a significant number of people?

Michael McGrath (Cork South Central, Fianna Fail)
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As the Deputy will be aware, in making any decision on VAT rates or other taxation measures, the Government must balance the costs of the measures in question against their impact and the overall budgetary framework. In the case of the tourism and hospitality sectors, an extension of the 9% VAT rate to the end of 2023 would cost more than €500 million. However, the Government recognises the challenging business environment the tourism and hospitality sectors are operating in and the role that these businesses play in driving employment and economic activity. Their regional presence and focus was an important consideration in the decision we had to make. For this reason, I will be extending the 9% VAT rate for these sectors to the end of August 2023. It will revert to the 13.5% VAT rate on 1 September 2023. The estimated cost of this measure is €300 million. This extension strikes a balance between the cost to public finances and the provision of support for these sectors.

Alan Dillon (Mayo, Fine Gael)
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I thank the Minister for his response. The Government's announcement on the final extension of the 9% reduced VAT rate for the tourism and hospitality sectors, which includes hairdressers, for a further six months, as part of the cost-of-living measures to deal with the increases was exceptional news for many businesses, as were the alterations to the temporary business energy support scheme, TBESS. If we look at the current VAT rates in Europe, at 13.5% only two other countries, namely Denmark and the UK, would be higher than Ireland. France, Italy and Spain are at 10% while Portugal is at 6%. I ask the Minister to give consideration in the months ahead to evaluating the potential impact this may have. I acknowledge that there have been numerous extensions since the Covid-19 pandemic and that the Government has played a hugely important role in the tourism and hospitality sectors, including with the wage subsidy scheme, but I ask the Minister to consider this.

Seán Sherlock (Cork East, Labour)
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I will allow Deputy Conway-Walsh to ask a supplementary question.

Rose Conway-Walsh (Mayo, Sinn Fein)
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This is an important point. We must see the cost-benefit analysis that was done on this matter to see exactly how the Government came to this decision. Everyone is open to examining this but we need to know what the impact will be on hairdressers and other services in the community. I note the Minister mentioned the regional impact. That needs to be set out clearly. The TBESS was welcomed but we must remember it was completely out of the question in rural Ireland. Those who do not have natural gas or liquified petroleum gas, LPG, have also been hammered as they have not been able to benefit from that. When I inquired today from the Department when the grant was coming forward, I was told there is no timeline for it. Uncertainty is killing these businesses. They cannot plan. They do not know what their future is.

Seán Sherlock (Cork East, Labour)
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I will also allow Deputy Durkan to contribute as he has been sitting patiently all night.

Bernard Durkan (Kildare North, Fine Gael)
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I agree with the previous speakers. Has an evaluation has been done of the possible negative impact and the cost to the various sectors that might be negatively affected? How does that balance against the costs so far outlined by his good self?

Michael McGrath (Cork South Central, Fianna Fail)
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I thank all the Deputies for raising this issue. As has been said, it the impact is not only on the tourism and hospitality sector. It also covers cinemas, theatres, hairdressers, historic houses, natural heritage facilities, open farms and amusement parks, to name a number of examples. We had to take a range of factors into account at a political level, not least the fact that if the VAT rate went back up on 1 March, it would inevitably have led to certain price increases. That would come at a time when we are trying to get inflation down and it would have moved prices in the opposite direction. It is a jobs-rich sector across all regions and many of the businesses concerned are dealing with high costs at this time. I acknowledge the point Deputy Conway-Walsh made about the TBESS. It was not possible to extend that scheme to cover businesses that use oil and LPG but the Department of Enterprise, Trade and Employment is bringing forward a grant scheme on a comparable basis to address that issue.

Alan Dillon (Mayo, Fine Gael)
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I commend the Minister on his efforts on the final extension to the end of August. However, I ask him to engage with the key stakeholders in this sector over the summer months and to provide a cost-benefit analysis of this measure. The economic outlook for this country is positive. We will have the wind behind us in our tax returns when we reach the next budget so I ask that this would be reviewed and for the Minister to come back to the House with some kind of report.

Rose Conway-Walsh (Mayo, Sinn Fein)
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I am looking forward to having the wind behind us. It is important for the Minister to publish the full information that he has, sooner rather than later, for us to be able to discuss this in a meaningful way and to evaluate what is there. Will the Minister please ask the Department of Enterprise, Trade and Employment to get the LPG gas issue sorted out?

Bernard Durkan (Kildare North, Fine Gael)
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I thank the Minister for his earlier reply. The question still remains as to whether the experience between now and September will be included in calculating a decision that might affect future jobs and services and a plethora of areas that may come to light in the meantime. Will the Minister look at this?

Michael McGrath (Cork South Central, Fianna Fail)
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The economic assessment recommends that the 9% rate be brought to an end. I have been clear about this in written parliamentary replies that I have provided in recent days. It fell to a political decision to be made as to when that would be executed. We have made the political decision that it will happen at the end of August. It is important that I am straight with the sector. The extension that has been provided is the final extension. The VAT rate will go back up to 13.5% on 1 September. I have no doubt the sector will continue to make a case. Other sectors will also make the case for preferential tax treatment and will do so in the lead up to the budget. I do not want to mislead anybody. I want to be straight up and honest. It is the final extension and the rate will go back to 13.5% on 1 September.