The fiscal Council has warned that the hospitality VAT cut is not likely to lower consumer prices.
The rate will be reduced from 13.5 percent to 9 percent on July 1., but the council which is opposed to the reduction, says that increases were passed on but cost cuts are retained by restaurants in the margins.
The council has estimated the full-year cost of the cut will bet €681m, a figure disputed by the hospitality industry. The council bases its estimates on previous temporary Vat changes.
Seamus Coffey, chairman of the Irish Fiscal Advisory Council shared “Where these rates are changed, and particularly when the rates are reduced, we don’t see a knock-on effect on prices and inflation. It gets baked into the margins of the hospitality firms themselves.”
