Frances Black (Independent) | Oireachtas source

I welcome the Minister of State to the House. The tourism and hospitality sectors are extremely important parts of the Irish economy. It is good to see that the Government has recognised this and assisted the sector by imposing a reduced VAT rate. That rate was further reduced during the pandemic to support these sectors which were some of the worst-impacted sectors during Covid-19. This was an important measure, however the future is in doubt. The problem is that there are bad actors charging outrageous prices who have alienated the public. The public are now asking why the sector that is not providing value to customers is enjoying such a reduced VAT rate. Extortionate prices do not just impact wealthy foreign tourists. They make life exceedingly difficult for people who travel around this country to see their families, to attend matches, concerts and important things such as medical appointments, as well as people who must travel for work.

I have spoken to Members who struggle to find places to stay despite the generous allowance that is provided. The sector is dysfunctional and makes the lives of ordinary people harder. It deprives many people, including Irish people, of the joy of having adventures and discovering for themselves the many wonderful places and people all over this country. Something needs to be done but I do not think that reverting the VAT rate is the correct course. Consumers are being buffeted by price increases in every area of their lives. Rent, insurance, energy, even staple goods in the supermarket are all increasing at rates that are totally unsustainable. This is not just a problem in the tourism sector.

I am particularly concerned about the increase in VAT during this cost-of-living crisis when people have so little disposable income to treat themselves and socialise. There was a massive degree of social deprivation during the pandemic. We all experienced it but we know it was necessary to save lives. It had a massive impact on our collective psyche. It is a joy to see people gathered with their friends in restaurants and cafés around Dublin. It makes me happy to know that the web of social life is repairing itself. These spaces are vital social infrastructure. I am alarmed by the number of such places that have recently closed in quick succession. Small businesses are struggling with increased food and energy costs and I fear that a crude reactive response will harm these businesses and already hard-pressed consumers rather than the intended targets.

While I find myself in agreement with the tourism and restaurant industry regarding the reduced VAT rate, I have to signal my concern about the language deployed by industry representatives about the jobs that the sector provides. Industry spokespeople claim that they should continue to benefit from the reduced rate of VAT and the generous Government supports introduced during the pandemic because they provide employment. This is a weak argument because jobs in the tourism and hospitality sector are often difficult, draining, rife with mistreatment and poorly compensated. The supposed justification for this is that the work is unskilled. I have to disagree with that. It requires a great deal of skill as well as stamina and resilience to work in this area. It saddens me that those in our economy who work the hardest are often the worst compensated.

I wish to outline a couple of statistics from recent Fáilte Ireland research. Some 68% of hospitality workers are paid less than the current living wage. Of those workers, 33% said their working hours were unacceptable while 62% do not get Sunday premium and 33% do not receive bank holiday pay. Trade unions also undertook research and WRC case reports show that abusive management practices, low pay and precarious work are rife within the sector. We need to ask whether the State should support an industry that does not have a good record on workers' rights. When workers are on low pay and cannot support themselves they need to have their income boosted by the State. Businesses receive an additional subsidy when their workers qualify for HAP and other benefits. The State should not facilitate this exploitation. It should end it. I echo the Irish Congress of Trade Unions' demand that employers who receive State subsidies and public moneys should be obliged to adhere to all employment legislation, engage in State collective bargaining structures and provide decent, sustainable employment terms and conditions or forfeit the support they receive.

I will draw attention to a proposal that was outlined in the pre-budget submission of the Music and Entertainment Association of Ireland. Targeted VAT reductions can be a useful measure to support consumers and businesses. Bands and performers are currently subject to the standard rate of VAT. Under section 9, annexe 3 of VAT directive 2006, member states can apply a reduced rate of VAT to the supply of services for these professionals. Currently 19 member states do this with reduced rates ranging from 3% in Luxembourg to 15% in the Czech Republic at a time when musicians and performers are still recovering from the effects of the pandemic and are struggling to return to pre-pandemic levels of income. This would be an effective way of supporting professional performers, particularly as Covid-19 supports are withdrawn. Our VAT policy can be utilised to support consumers, workers and artists. We need to find ways to tackle bad industry practices. That is vital, while making sure that small businesses that animate communities are protected. That is a big challenge but it is essential that we rise to it.