Galway hospitality owners call for reduced VAT rates ahead of general election

By Grace Hanna

On Monday, 21 October, the Restaurant’s Association of Ireland (RAI) set out their 10-point manifesto for hospitality in advance of the imminent general election, this manifesto includes another call from the hospitality industry to reduce VAT rates for food outlets.

The manifesto aims to fix what the association described as a “broken financial model” facing Ireland’s hospitality industry.

Top of the list is the call to decouple the VAT rate on food from accommodation, reducing the food VAT rate to 9 per cent, leaving accommodation at 13.5 per cent. 

Ken Walsh, owner of ‘Bia don Smaointeoireact’ in Galway City has been in the hospitality business for 21 years in and wants to see “heightened focus’’ on hospitality ahead of the election.

“As a small business owner, I generally support the government, but their policy on us has been very poor,” said Ken. 

Speaking about the closure of over 600 hospitality businesses in the past year, he said:

“There’s a reason why we’re disappearing, if you look at the high street alone, small family run businesses are disappearing one by one because of the VAT rate.”

“I would predict in the next 15 years there will be few family run businesses operating in Galway City, because we are being driven out.’’

‘A fair and equitable chance’ 

Ken explained that after the election, he would like to see a dedicated Minister for Hospitality. 

“A dedicated minister would be fantastic, but they would have to have teeth – and be able separate us from hotels.”

Ken said that he would also like to see reductions on PRSI. 

“In the last period of two months, I’ve had to pay over eleven-thousand in VAT and PRSI alone.”

“Hospitality have been given grants in the past, but I don’t want a grant, I don’t need one to run my business.

“What I do want is a fair and equitable chance to do so.’’

Ken comments: “There’s no denying it’s tough, especially when you are putting your heart and soul into it.’’

Hidden costs in hospitality

Ciara Russell, co-owner of café and wine bar ‘Siar’ in Kinvara said, “We’re seeing pricks from all sides at the moment.’’

“Aside from VAT, basic things like milk and butter have gone up 50c in the past two to three weeks and there’s no end to it.”

“I’d like to see things like this recognised ahead of the election,” she added.

Ciara noted that in the last year Kinvara has seen a restaurant open and shut and two others shut down.

“I’m in a WhatsApp group with around 400 members of the hospitality community and everyone seems to be double and triple jobbing,” she said.

‘’Restaurants are now having to diversify, we started a cheese stall this year at the local market to up the income.”

Ciara also said that she hopes candidates will shed a light on the ‘’hidden costs’’ ahead of the election. 

‘’We spent a couple hundred euro on cups this week for example, machines break too and it all costs money.’’

VAT as the central issue

“The cost base of business in Ireland is continuously increasing, said Scott Fitzgerald, Co-owner of the Old Barracks Athenry, which operates as a guesthouse, restaurant, bakery and catering service.

“In Galway, hospitality is beginning to compete with the big pharmaceutical companies,” he said.

“Their entry level jobs are paying up to €16 an hour, so we have to be able to match that for our staff.”

With over 25 years’ of hospitality experience, Scott said, “In the past, a good cut of meat would have been €7.00 euro, now it’s €12.50.”

“With dairy up 20 per cent, and increased energy rates, trading as a local business is becoming increasingly harder,” he said.

Scott also explained that VAT should be a “central issue” ahead of the election.

“Improving rates is the only place the government can help businesses like ours with one singular change.”

“Rather than them trying to shave back the price of beef, dairy, energy, and PRSI a return to 9% VAT would give a business like ours an extra eight to ten-thousand euro every month, with one small change.”

More Galway Pulse coverage of the hospitality crisis can be found below

Galway café owner criticises budget on lack of change on VAT