Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

The purpose of this amendment is to give effect to the Government's decision on 10 May to extend the 9% VAT rate that currently applies to the tourism and hospitality sectors for a further six months. This rate will, therefore, remain in place for these sectors until 28 February 2023 at an estimated cost up to that point of €250 million. The extension will cover the same goods and services as the original measure, which is to say, restaurant supplies, tourist accommodation, cinemas, theatres, museums, historic houses, open farms, amusement parks and hairdressing, as well as certain printed matter such as brochures, leaflets, programmes and catalogues.

I do not need to tell the Seanad that the tourism and hospitality sector was one of those most impacted by the public health restrictions that were put in place throughout the pandemic. Through absolutely no fault of their own, bars, hotels and restaurants had to close on multiple occasions to allow our country to make its way through the very worst of the public health crisis. The 9% VAT rate was introduced as part of a wide range of measures to respond to the challenges posed by Covid-19 in order to support the hospitality sector. The Government has decided to extend the period when the rate will apply for a further six months.

I will elaborate on a final two areas of rationale for this decision. First, I am very confident that as we move into the important summer trading period, many hospitality businesses will have a very active and successful summer. What is important for all of them is to be in a position to have a good Christmas and a good start to 2023. In particular, there needs to be clarity for the hotel sector regarding bookings, especially for tours and international tour operators as we move into the early part of next year. They need to know where they stand with their pricing. In order for them to know that, they need to have clarity regarding where they stand with the VAT rate.This is why I believed an extension beyond budget day was merited. If I had given an indication that this measure would run up to October, we would have found many businesses that were looking to put in place bookings - large bookings, I hope - approaching the middle of October but still unclear regarding where they would stand from a profitability point of view for the critical months of November, December, January and February. That is the reason the Government agreed to my proposal for a slightly longer extension than we had done with other measures that are in place at the moment.

Second, I am also very much aware that, at the end of this month, we will see the conclusion of the employment wage subsidy scheme. The Government made that decision and I remember bringing the measures into this House across the end of last year to change the employment wage subsidy scheme and to give businesses that were affected by the 8 p.m. required closure regulation an extra four weeks on the employment wage subsidy scheme. That is coming to an end in two weeks' time, which will mean many businesses which were on levels of subsidy of between €250 and €350 on 1 December will exit from the subsidies entirely by the end of this month. I expect that this decline in subsidy will be taken up by normal levels of trade as we have confidence about our economy being fully and safely open. However, the Government still acknowledges that for many businesses, after a pretty harrowing two years of trading, that is still a significant change in the support that had been made available to them.

For all of those reasons, clarity regarding where we stand with the 9% VAT rate is needed now. I believe the hospitality sector and all of its different elements are very important parts, not just of our economy, but of our society. I had the privilege of representing this sector and being responsible for it for nearly two years as Minister with responsibility for tourism, and I know at first hand the challenge involved in running a restaurant or hotel and the intense difficulty that those running those businesses and working for them have faced over the last two years. It is hard work. It is an essential part of our economy, with one in ten employees working directly or indirectly for the sector, and it is a very important part of our society. Through the employment wage subsidy scheme, the Covid restrictions support scheme and this measure, I and the Government have shown a willingness to support this sector and to help it get back on its feet when it puts the Covid pandemic behind it. That is what we are doing.

It is the final part of the jigsaw. I hope to be in a position where I see restaurants and hotels all over our country have a really good summer and get set for a good Christmas. At that point, the temporary rate will come to an end and, I hope, we will then be in a position where we will see our hospitality sector trading at the levels that it was before the sector and all of us got hit by the effects of the pandemic. I am pleased in particular to introduce this amendment in the Seanad and I look forward to hearing the views of Senators.