The Irish Congress of Trade Unions has today (23rd July) urged the Government to drop proposals for a €1bn cut in the VAT rate for the hospitality sector, calling it "economic vandalism”.
The Government has previously suggested cutting the VAT rate following intense lobbying from the hospitality industry, with a proposal that the rate would be reduced from 13.5% to 9%. Following the publication of the Summer Economic Statement, Minister for Finance Paschal Donohoe stated that the cost of the cut would be almost €1bn, using the majority of the €1.5bn identified for tax measures.
However, ICTU has said that the facts about the hospitality sector do not justify tax cuts, given the sector is now growing, with 11 new companies incorporated for every liquidation, and employment was 7% higher in the first quarter of 2025 than a year earlier.
Commenting, General Secretary of the Irish Congress of Trade Unions, Owen Reidy said:
"The proposal to cut the VAT rate at a time of huge economic uncertainty flies in the face of all available evidence, and would amount to nothing less than economic vandalism.
"Last year, the hospitality industry's lobbying campaign suggested the sector was struggling. Looking at the facts, we now know that this is simply not the case.
"Hospitality is a sector rife with low paid employment and poor conditions, and all evidence suggests that the reduction in VAT will not be passed on to consumers or staff, but pocketed by employers.
"The Government has identified many laudable priorities as part of its Programme for Government: housing, reductions in child poverty, and investment in disability services. Government cannot keep narrowing the tax base while promising better public services.
“Given that Ministers have been giving serious warnings about economic uncertainty, why would they prioritise a corporate handout costing almost €1bn?
“Simply put, there is no economic rationale for the VAT cut".
