SIPTU representatives have criticised the reinstatement of the 9% VAT rate for employers in the hospitality sector, warning that the measure represents a costly subsidy to business with no guaranteed benefit for workers or consumers.
SIPTU Sector Organiser, Áine Feeney, said: “Our Union represents employees in hotels, restaurants and tourism services across the country. Many are struggling with low pay amid a cost-of-living crisis. While assisting their employers, this VAT cut does not help these workers.
“What the Government should be prioritising in the sector are measures that ensure fair wages, decent working conditions, and stronger enforcement of employment rights legislation, including secure contracts and stable working hours. Investment in training and career pathways will also ensure staff retention in the sector, improving services to consumers and preparing it for the future.
“Instead, the Government has caved in to the demands of employers’ groups with a measure that will cost the Exchequer an estimated €232 million this year and €681 million in a full year. It is a cut that will apply to all food services and catering businesses, as well as hairdressers, regardless of size or profitability.
“Minister for Finance Simon Harris has even acknowledged that he does not expect the VAT cut to be passed on to consumers, stating that its primary purpose ‘is to reduce the cost for business’. It is a measure that will disproportionately benefit fast food chains and Michelin-starred restaurants, while further eroding our narrow tax base and ensuring other taxes will be higher. Indeed, the Irish Fiscal Advisory Council has found that the cost of the policy was equivalent to increasing the standard rate income tax bands by €3,000, hiring 11,400 nurses or 7,800 teachers.”
SIPTU Services Divisional Organiser, Adrian Kane, said: “At a time when many workers are struggling with the cost of living, this measure represents a missed opportunity to invest in people rather than profits. If the Government is serious about the future of the hospitality sector, it must focus on improving job standards, not simply reducing tax liabilities for employers.
He added: “All public policy decisions must be conditional and accountable. Workers cannot be an afterthought in policies designed to support this sector.”