Congress Agrees with Department of Finance’s Review of 9% Tax Subsidy to Hotels and Restaurants

31 Jul 2018

Following on from the publication of the Department of Finance’s ‘Review of the 9% Vat Rate’ today, the Irish Congress of Trade Unions calls upon the Minister of Finance to heed the conclusions reached by the Review and to act accordingly in reversing the 2011 tax cut for hotels and restaurants and to apply the fairer rate of 13.5% on these highly profitable businesses.

Congress General Secretary, Patricia King said: “Today Congress is publishing a reader-friendly guide to this generous tax subsidy which mirrors the conclusions reached by Finance. It is a rare day when trade union representatives of workers across the hospitality sector and government officials reach the same conclusion, but today is one such day” she said.

According to Congress fact sheet (LINK), there are nine reasons why the 9 per cent tax rate should revert to the 2011 13.5 per cent rate, including the fact that the sector has completely recovered from the economic crash which prompted the original campaign by hoteliers and restauranteurs for a temporary cut.

Congress lead researcher on the publication, Ger Gibbons said: “Seven years later, the rationale for this cut is as stale as last year’s Easter lunch. All that is left is a handout by taxpayers to highly profitable businesses with a well-deserved reputation for high prices for customers and low wages for staff”.

He said: “The conclusions of our research are that this tax subsidy is unnecessary in a sector which is booming and whose larger firms are doing best of all; where prices are still among the highest in the EU; where workers are three times more likely to subsist on the minimum wage than the average Irish worker; where the alleged impact on employment has been greatly exaggerated and finally, where essential tax revenue is diverted from essential services like housing or childcare”.

Government estimated this subsidy would cost €880 million over its planned 2½ year application. The actual cost has been €500 million a year. The Revenue Commissioners put the cumulative cost at €3.2 billion over 2011-2018. 

Mr Gibbons added: “ICTU first called for the abolition of this measure in Budget 2017. Had this been done, the Government would have had an additional €500 million a year to invest in 2017 and in 2018. This would have been enough to build 2,500 social homes and to double investment in childcare. That is the choice faced by the Minister for Finance. It is not that difficult. In fact, it is a no brainer.”

ENDS