Details have been revealed of the strength of the opposition by Department of Finance officials to the Budget VAT cut for the hospitality sector in their pre-Budget submission.
They revealed the measure creates dead weight through support for businesses “who did not need it.” Civil servants argued that dead weight occurs when aid is provided to stable enterprises.
Department of Finance memos costed the potential reduction of value added tax rate from 13.5 per cent to 9pc at €867.7m per year. Fiscal advisory council chair Seamus Coffey stated that the impact of rate changes equaled the cost of hiring 11,400 nurses or 7,800 teachers per year and that the measure provided sector relief despite questions on consumer benefits.
The Government proceeded with value added tax reduction in October 2025 budget announcement albeit delayed until mid 2026.;
