During the pandemic, the VAT rate on hospitality was cut from 13.5% to 9% to help the sector cope with the impact of international travel restrictions.
Originally, the measure was due to last 14 months but the Government kept extending the rate until this month when it returned to 13.5%.
In its pre-budget submission, the RAI said the Government should uncouple the food sector’s VAT from the one charged on hotels - which have been widely accused of price gouging in recent years.
“We need it desperately,” RAI President Paul Lenehan said.
“Business is tough enough as it is; the last couple of months have been tight and I don’t think people really realise until they do their November VAT returns what an extra 4.5% is going to represent, it is huge and it is critical.
“Margins are already at the lowest I’ve ever seen.”
A give-away budget?
The budget will take place next month and there has been speculation that the coalition’s poor polling will put pressure on ministers to “loosen the purse strings”.
“Along with General Elections, it [the budget is] really one of the few times in the calendar that the non-political nerds actually pay attention to politics and it’s important for shaping voter intent,” Irish Times reporter Jack Horgan-Jones told The Pat Kenny Show.
The State is expected to record a surplus of around €10 billion due to booming levels of corporation tax receipts.
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