When news began to filter through last evening that there would be no 9% VAT rate for the food-services sector announced in today's Budget, the disappointment was palpable.
Months of intensive lobbying, which involved meetings with ministers and officials, the commissioning of research, public relations strategies and more, all came to naught.
The Restaurants Association of Ireland, which had been among those leading the drive, was blunt in its assessment of the implications.
It described the decision as a "devastating blow" to a sector already in crisis.
"Since the VAT rate was increased to 13.5% in September 2023, a total of 612 restaurants, cafés, gastropubs and other food-led businesses have been forced to close permanently," it said.
"Arriving on top of significant increases in the minimum wage, paid statutory sick days, the upcoming pension auto-enrolment scheme and sky-high energy and food costs, the VAT increase proved the final nail in the coffin for many."
The reality though was that despite pressure applied by Fine Gael and the Minister for Enterprise, Peter Burke, the Government as a whole was not for turning.
As far back as July, the Tax Strategy Group at the Department of Finance had clearly stated that reinstating the 9% VAT rate for the tourism and hospitality sector remained "unjustified".
It warned the cost for a full year was estimated to be around €764m.
"Even where the measure is restricted to food and catering services, the estimated full year cost is €545 million," it said.
"Therefore this would constitute an enormous fiscal transfer of taxpayers' money to the sector which the evidence available at present does not support."
Given the Government’s stated strategy of limiting the tax package in the Budget to €1.4bn, the prospect of up to half that benefiting just one sector, was in reality never going to fly.
In the last few days, rumours of a compromise had been doing the rounds, with an 11% middle ground rate being floated by some.
But in the end, it didn’t get over the line.
As a consolation, the Minister for Public Expenditure announced a €170m energy support scheme.
It will provide around €4,000 to hospitality and retail businesses, with approximately 39,000 set to benefit.
The registration thresholds for VAT are also set to rise.
Less positive for firms who argue they remain under siege from rising costs and low margins is the latest hike in the minimum wage.
It is to increase by 80c to €3.50 an hour from 1 January.
That’s less than what had reportedly been recommended by the Low Pay Commission, but will still add to the bottom line of businesses across sectors that rely on low-paid workers, although the employers' PRSI threshold will rise in line with the increasing wage, to head-off a double-whammy.
But despite the VAT campaign loss and the extra minimum wage costs, there were plenty of positive developments for businesses in the Budget.
For years, business groups have been lobbying for the steadily accumulating surplus in the National Training Fund to be put to good use.
Now at €1.5bn, they argued it should be used to upskill those entering and already in the workforce.
Today the Government confirmed a pledge made by the Taoiseach at a recent Ibec event, that the fund would be tapped.
It will be used over six years for both current and capital investment to fund research, further and higher education, skills and development and decarbonisation.
There was also good news on infrastructure, which business groups had repeatedly called for investment in.
€3bn in proceeds from the sale of AIB shares and a further €1.7bn under the National Development Plan will be injected into key projects in areas like energy, housing and water.
There were also a series of announcements aimed at helping start-ups to scale, including the Employment Investment Incentive, the Start-Up Relief for Entrepreneurs and the Start-Up Capital Incentive all being extended for two more years to end 2026.
The first year payment threshold in the R&D tax credit is also set to rise from €50,000 to €75,000.
And following pressure on it to act to help boost the Irish stock exchange as a place to raise capital, the Government has also announced a new relief for expenses incurred in connection with a first listing on it or a European stock exchange, subject to a €1m cap.
The small benefit exemption is rising from €1,000 to €1,500 and it will now be possible for employers to give five non-cash benefits each year.
That will resolve the bizarre situation where companies were not able to give staff members a small gift on their birthday, or a bunch of flowers on the birth of a child, for fear it would count as one of the two permitted gifts in that 12-month period.
While for family business owners looking to pass on the asset to a child, the plan to levy Capital Gains Tax on the transfer of family businesses worth over €10m has been watered down.
So overall, there is plenty in there for businesses to consider. Many of the measures have been welcomed, some only in a lukewarm manner.
This Budget has all the hallmarks of a pre-election giveaway. Time will tell whether businesses are swayed or not.
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