The debate about reducing VAT in hospitality has taken a new turn with a dispute over its alleged €1bn cost, more than double what Department of Finance officials have historically estimated the cost.
At a press conference on Tuesday the cut was presented by government officials as diverting money which would be available for tax cuts elsewhere.
It comes amid reports that the Government is considering a delay in implementing the VAT reduction for the hospitality sector until 1 July 2026. Back briefing over the past few days has revised the position, argued by Department Officials that the reduction is too generous and too expensive.
The headline on RTÉ was: “Hospitality boost in Budget to shrink workers’ tax cuts” and the report led off: “the big winner from next year’s Budget is going to be the hospitality industry, that will happen at the expense of income taxpayers.”
Minister Niall Collins expressed a preference for targeted support rather than a blanket VAT reduction, highlighting the need to assist the hospitality sector and vulnerable groups.
Pat Crotty from the Vintners Federation warned that without action, more pubs could close due to varying capacities to profit across regions.
Discussions around extending the lower VAT rate solely to hospitality and not the accommodation sector have yet to yield any agreements.
Eoghan O’Mara Walsh shared: “Stating that cutting hospitality VAT to 9pc ‘would cost between €950m and €1bn’ has me scratching my head. Finance officials have long costed it at €545m. Why suddenly has cost doubled? If anything should come down with CSO reporting tourism slump? Odd.”
