Following the announcement of the VAT increase during last week’s Budget 2019 release, Limerick Voice reached out to hospitality businesses around Limerick to hear what they had to say about the matter.
VAT payable by the hospitality and tourism industry is due to rise from 9% to 13.5% starting next year.
Since 2011 the hospitality sector has been paying a special rate of 9% VAT, which the government introduced to boost the hospitality sector and keep businesses afloat during the recession. Government officials now find that the sector has regained normality and is flourishing.
Owner of the Tuscany Bistro restaurants in Limerick City, Castletroy and Ballina, Sabrina Amadeo, disagrees.
“I feel that Limerick is just coming to the cusp of coming out of a really difficult time, so this is really a setback,” Sabrina says.
When asked how she will adapt her business, the restaurateur says: “We are going to have to tweak [prices] here and there and we will try to absorb as much as we can but there will be an element that will be carried over to our customers.”
Sabrina says: “We are going to suffer the most in our neck of the woods”, as Limerick does not attract as much tourism as Dublin or Galway.
Mayor of Limerick City and County and owner of Collins Bar in Dooradoyle, James Collins, had a similar view, saying: “We really have a two-tier economy in Ireland. We were hoping that the government would seek to rebalance that because you have so much of our tourism is driven into Dublin.”
Mayor Collins says due to this, hotels in Dublin are much more profitable but this does not reflect on small-scale hotels from around the rest of the country.
Tourism season might be 8 to 10 weeks at most for small-time operators in places like Kilkee or Connemara but these places will still have to pay the extra 4.5% during the remainder of the year.
In terms of his own business, Collins Bar, the mayor predicts he will have “less scope to take people on and train people up” as the 4.5 % increase will make a dip into turnover.
When asked if he saw the VAT increase coming, manager of the Stables Club and Scholars Club at University of Limerick, Declan Collins said: “There is a VAT on food in every country so I’m not surprised to see them put it back up. Like everything else in business we just have to deal with it.”
Declan, who oversees the membership clubs based in University of Limerick campus, said he has faced increases in costs year on year but keeping his prices consistent and affordable is what makes a business sustainable.
“There is a level that customers want to pay, and you have to work your business around that,” he said.
“The VAT increase was something I think was going to come with people putting up prices because it then looks like they can afford it.”
The Stormy Teacup owner, Adam Reeves, says he also saw the VAT increase coming saying: “It was almost too good to be true at nine percent.”
“This is just one more thing to come around the corner. If it wasn’t this it would be something else,” he said.
“So what I’m going to do in regards to this just like every problem that’s ever been thrown at us which is just to deal with it. But a lot of people won’t be able to and a lot of people aren’t going to want to do this anymore.”
Adam says “margins are thinner than ever” and with the VAT increase, he thinks a lot of places may end up closing down.