VAT cut for hospitality will do nothing for workers in the sector

11 October 2020

Responding to reports that the rate of VAT in the hospitality industry will drop from 13.5% to 9% in next weeks Budget, Labour Finance Spokesperson Ged Nash said:

“The problem for the struggling hospitality sector is not demand but the fact that people cannot go out to socialise. No amount of populist and expensive tax cuts will resolve that.

“We all want to see tailored assistance to a sector on its knees, but this is an expensive and inefficient way to do it.

“To cut the rate temporarily was the correct thing to do from an economic point of view in 2011 where demand and spending power was the problem.

“However, it soon became apparent that as employment grew in hotels, bars and restaurants so did the profits of the big players with prices going up for customers and workers remaining on low pay and in poor conditions.

“Workers in this sector are three time more likely than the rest of the labour force to be on the minimum wage.

“The rate went back up to 13.5% and at the last count the cut took €500 million out of the coffers, money that could otherwise been used for housing and our health service.

“It is worth nothing that the last government went against advice from officials in the Department of Finance year on year on the value and efficacy of the lower rate and only hiked it back up to 13.5% in late 2018.

“There is in point fighting this crisis with the weapons from the last one. The conditions are much different now.

“If the government is hell-bent on pursuing this strategy, they should at least attach conditions to such a measure obligating the industry to engage in collective bargaining through the Joint Labour Committee which the industry continues to veto.

“It will come as a disappointment to those who think Sinn Fein supports workers that that party is now campaigning for a massive tax cut for an industry notoriously addicted to low pay and precarious work and with no requirement to drive better conditions and pay for workers as a condition.”

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