Galway café owner criticises budget on lack of change on VAT

The owner of a popular Galway café has strongly criticised the government’s decision not to lower the VAT rate for the hospitality sector in Budget 2025.

Graham O’Riordan, co-owner of the Little Lane café, has said that businesses in Galway are finding it difficult to “maintain standards” without putting up their prices, and that “small businesses are already under pressure” as it is.

Speaking on the behalf of small businesses, Mr O’Riordan said that the decision not to bring back 9% VAT rates for hospitality “probably would have meant” the difference between staying open or closing for a lot of local businesses.

He also went on to say that because the government has decided to leave the VAT rate at 13.5%  for the hospitality sector that we “are going to see everything get more expensive”.

The Tax Strategy Group has said that is would have cost the government around €764m to reduce the VAT rate back to 9%.

Mr O’Riordan referenced a statistic released by the Restaurants Association of Ireland, which stated, “Since the VAT rate was increased to 13.5% in September 2023, a total of 612 restaurants, cafés, gastropubs, and other food-led businesses have been forced to close permanently.”

“That is VAT that is not coming in anymore”, added Mr O’Riordain. He said the closures could have been largely avoided had the rate stayed at 9%.

When asked what he would have liked to see in this years budget, Mr O’Riordan commented, “I would have liked to see more government support for small businesses.” Mainly, support that “wasn’t loan based”, he said.

He said the government has been very “short-sighted” in their decisions over the years and that more grants for young and small businesses in Ireland are needed.

Regarding the announcement of the raising of the minimum wage by 80c to €13.50 an hour on January 1, Mr O’Riordan said that he both “understands and totally supports” this increase.

However, he explained that the increased cost for their business would factor into coffee price increases in the new year.

Mr O’Riordan, who says he pays his employees more than the current minimum wage and plans to raise his employees’ wages in accordance with the 80c rise, said it would be another blow for many local businesses, especially cafes and restaurants with larger staff groups.