Small businesses ‘need oxygen’
Michael Olney
Cork County Council has written to the Minister for Finance to ask for a reduction in VAT for the hospitality sector.
The rate of Irish VAT which applies to tourism and hospitality increased from 9% back to 13.5% on 1 September 2023. The temporary 9% VAT rate came into effect in 2020 to help the hospitality industry to stay afloat during the Covid-19 pandemic.
Cork County Council is now calling on Minister for Finance Michael McGrath to reconsider current rates and to bring VAT for hospitality back down to 9% as a wave of restaurant and other business closures sweeps Cork.
Speaking during Monday’s meeting of Cork County Council, Fine Gael Cllr Marie O’Sullivan said it is frightening to see so many smaller businesses being forced to close.
“These small indigenous businesses are the heartbeat of our towns,” said Cllr O’Sullivan. “They are the businesses that give the work experience, they give the spot prizes, they give the vouchers – they are the cog in the wheel that keeps any small town going,” she added.
Ms O’Sullivan, who runs a business located on the Wild Atlantic Way, likened the VAT increase to an entire classroom being punished for the bad behaviour of “one bold child”.
“We have some people being very greedy in our big cities and all of us are getting the same punishment, which isn’t fair,” she said. “Everyone is limping along. Rural Ireland needs oxygen.”
As well as the VAT increase, councillors highlighted a number of other major issues facing business owners such as more expensive goods, the introduction of an auto enrolment pension scheme, increased sick pay, and the recent increase of minimum wage to €12.70.
Independent Cllr Alan Coleman said: “It’s just not sustainable for smaller businesses. The rise in the minimum wage, it doesn’t just affect the minimum wage; people who are earning more than the minimum wage expect rightly that the gap between them and the minimum wage would be maintained.”
Independent Cllr Paul Hayes said there are a number of ways in which the Government can take action such as delaying the payment deadline for amounts owed for tax debt warehousing, a scheme established to help businesses experiencing cashflow issues during the pandemic.
He also questioned the methods used to determine the rates paid by businesses. “The rates valuation office has this antiquated calculation where your rates are based on the square footage of your premises instead of being linked with turnover or profit,” said Cllr Hayes.
Pub owner, Independent Cllr Danny Collins, said he no longer enjoys his work due to the stress caused by increased costs.
“For a person who’s 26 years in the business myself, to be quite honest, I used to enjoy going into work before but it’s a struggle now,” he said.
“We must think of pubs who only have drink. These pubs pay 23% VAT. I think this should be looked at as well. At least reduce it down to 17% or 18%. Give the pubs a chance.
“In West Cork alone, a number of pubs have closed in Skibbereen, Bantry, Schull. There are very few pubs in these towns. Where before you had people during Christmas doing the 12 pubs in their local town. They now have to use two or three towns to do the 12 pubs.”