Jennifer Carroll MacNeill (Dún Laoghaire, Fine Gael) | Oireachtas source

I will leave the question of the sectoral order to the Department of Enterprise, Trade and Employment as it relates to it. I will observe that the Low Pay Commission pays a strong role in wages across every sector. We have had legislation on payment of wages in tips and on sick pay. There have been a number of increases in minimum wage. I note the foregoing in respect of pay, which is a hugely important part of what Senator Higgins is raising in terms of the analysis of the report.

On VAT, the application of State supports to this sector and the extension of those supports, I suggest this is a good moment in that conversation coming out of the pandemic and being at 3.9% employment, which is a record low since the early 2000s. It is a very happy balance of a conversation to have survived the pandemic with the employment wage subsidy schemes and VAT support schemes and to be in a balanced discussion about a six-month window of additional support to that sector. The Minister, Deputy Michael McGrath, has been clear the extension is until the end of August and no further. The sector is on notice of that, which is important.

Application of State supports, as is reflected in this report, is nuanced. VAT, as the Senator said, is unfortunately a blunt instrument, the parameters of which we do not necessarily control because they are tightly controlled at European level for good reasons. I understand it is not permissible to attach conditions, make further nuances within it or apply it to this or that part of a sector. It would be wonderful if we could, but it is not that way. We have to take a broader perspective on the whole industry. There is a huge difference between large hotel groups and small bed and breakfasts in their ability to manage their recovery and in their capacity to buy products in bulk, warehouse funds and treat tax differently, as well as in their revenue and ability to manage and warehouse it in different ways. They are very different cost operations. We would not like a scenario in which we had withdrawn supports and discovered that, while big businesses maintained profitability and viability, it was at the expense of brilliant hospitality services around Ireland who offer something genuine, smaller and different. The value of the extension of the reduced VAT rate is the additional support it provides to surmount the difficulties the sector went through during the pandemic, which were more acute than many other sectors and take longer to recover from, even with the employment wage subsidy continuing as it did. That additional support helps protect smaller providers, which are a point of differentiation in the tourism industry. For that reason, it was a well justified political decision. However, it is clear we are back at full employment and the extension of the VAT rate cannot be justified past that. There is merit in looking at the sector overall to find ways to support it, having regard to what I have said about the different sizes.

By way of evidence base, the Department did an assessment of this in 2018 which resulted in the VAT rate going back up to 13.5%. The pandemic considerably changed that position and the Department did another assessment in January which provided the basis for the decision to bring it back to 13.5% overall. However, we have to look at the sector in all its complexity and make sure we are not cutting off too soon and have viability for all the businesses.

I will not accept the recommendations. I will, however, point to the existence of those other research papers should the Senator seek further information.