Why the Budget Didn’t Help the Hospitality Industry

Energy

The FF/FG party line was that businesses would qualify for up to ten thousand euros per month to help with their energy costs. But this was all smoke and mirrors. The fine print on this measure means it only helps ease the strain to the tune of forty per cent of monthly energy bills. Moreover, with energy bills increasing by four hundred per cent, this cushion will not relieve the business enough not to pass the increase on to the consumer.

Our electricity has gone up 400%. Don’t think 40% is going to help enough businesses, particularly if bar returns to 13.5%. what they give you with one hand they take with another. https://t.co/7R7RJbKu5U

— Dr. Jp McMahon (@mistereatgalway) September 27, 2022

This energy bumper essentially falls as short as giving social welfare recipients their extra twelve a week. It’s disguised behind dazzling billion numbers that deflect from what the policy does.

Rising energy bills are frighteningly impacting hospitality businesses in particular because there is a lot of energy used in cooking and freezing. It is one of the most energy-consuming businesses to run. There is very little an individual business can do about this. Restaurants must heat water to wash dishes. They must heat the stove to cook the food and refrigerate it for freshness. They must have a freezer for many other perishables – such as ice cream.

VAT

There was no subterfuge, though, around the VAT kerfuffle. The budget outlined yesterday that FF/FG would not extend the current 9% hospitality VAT rate. Instead, it is set to increase to 13.5% on 28 February 2023.

This increase will make Ireland’s tourism VAT rate the second highest in the European Union. It will be far above other European countries where tourism is a significant part of their economies. Such as Portugal, Turkey and Malta.

Leo Varadkar did say they would review the situation surrounding this before it increases in March. It is, however, believed by many this is a punishment from Pascal O’Donough in retaliation for hotel price gouging this summer.

This can’t be proved. But that hasn’t stopped Twitter or the industry from pointing out that this is out of step with a ‘cost of living crisis’ themed budget. The Chief Executive of the Restaurants Association of Ireland called the budget a “big disappointment.”