VAT rate ‘holds the key’ to survival of Galway restaurants

Many of Galway’s restaurants will not survive unless the current VAT rate is retained in next month’s budget.

That’s the prediction from the Restaurants Association of Ireland who have launched a ten-point plan for the survival of the industry, which is responsible for one in four tourism jobs and contributes €2 billion to the Irish economy each year.

Galway man Adrian Cummins, who is chief executive of the association, is leading the charge for the VAT rate not to be returned to 13.5%.

“When the economy went into decline, restaurants endured falling numbers of diners, rising prices and great financial uncertainty, with many having to close their businesses. Money generated by this reduced VAT rate, however, has kick-started a reversal of fortunes,” he stated.

“Since the VAT cut, employment in the restaurant  and tourism sector increased by approximately 9000 jobs  and this growth will continue, with an additional 5,000 jobs to be created over the next 12 months if VAT at 9% remains in effect” said Mr Cummins.

The association is calling for the current rate of excise duty to be decreased to encourage spend in restaurants.

“The savage increase in excise duty in Budget 2013 has crippled many restaurants. Tourists and Irish consumers compare Irish prices with those in other tourist destinations like Spain, Italy, Portugal, Greece and France, where there is no duty on wine,” Mr Cummins said.

Irish restaurateurs pay the highest catering wage rate in Europe and have to endure the highest excise duty on wines in Europe. Other costs were equally crippling – Irish food costs are 18% above the European average, the waste licence fee has increased from €1,200 to €4,000, with the average restaurant paying €6,254 in waste charges  and €15,813 per year on commercial rates.

The association are calling for the creation of a business inspection and licensing authority that absorbs the existing business inspection activities of the Health and Safety Authority, and the National Consumer Agency.

“Restaurants deal with, on average, twenty-five different agencies and authorities in the day-to-day running of their business. Ireland is the most expensive country in Europe to run a restaurant,” said Mr Cummins.

“Restaurateurs are entrepreneurs; the government needs to be reminded of that. When a restaurant opens or expands, they will create several jobs and generate business for the area and their suppliers. In total the industry employs 64,000 people.”