The Chair of the Clare Tourism Advisory Forum has warned that customers will bear the brunt of a tax hike for the hospitality sector.
The lower rate is set to be scrapped from February, as part of budget measures.
The VAT rate for the hospitality sector has remained at 9% for almost two years, having been introduced during COVID-19 as a temporary measure to ease the burden on businesses.
But the discounted rate is to end next February, with today’s budget seeing it return to its pre-pandemic level of 13.5%.
It comes amid concern that some outlets in the hospitality sector have been hiking room rates over the summer months, due to spikes in demand.
The CEO of Ennis Chamber believes this will lead to businesses in the sector in Clare and elsewhere suffering unfairly due to price-gouging by outlets primarily in Dublin.
The Chair of the Clare Tourism Advisory Forum says the trend in Dublin was damaging both to businesses here and the country’s tourism product.
Sean Lally says while businesses in Clare had to raise prices in reaction to inflation, it wasn’t to the same extent as elsewhere in the country.
The Ennis hotelier says while it’s unfortunate, the difference in the VAT rate will ultimately have to be passed on to the customer.
A former Chair of the Shannon branch of the Irish Hotels Federation fears the move could impact significantly on employment in the sector.
It’s estimated that around 40,000 employees left the sector nationwide during the pandemic and Dermot Kelly is calling on the Government to stay the course and back employers.
He’s welcoming the one billion euro Temporary Business Energy Supports Scheme, which will pay for 40% of the increase in gas and electricity that businesses are facing, but he says further support is needed.
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