Minister Michael Noonan,
Minister for Finance,
Department of Finance,
26-28 Clarendon Street,
1st October, 2013
Dear Minister Noonan,
I know that you are hoping to increase the VAT rate on food back to 13.5% I am hoping that these points will give you a reason to reconsider. I own SABA restaurant and SABA To Go takeout in Dublin city and we currently employ 82 staff. This has increased by 14 since the reduction of VAT, therefore creating jobs and employment.
Our business fell off a cliff after the crash and our turnover fell in double digits for a number of years. Your inspired move of reducing the VAT rate turned the tide. It stopped the falling turnover and we have managed to maintain our turnover over the last two years.
There is no doubt that the increase in VAT will have a detrimental impact on our business. Our customers cannot afford to pay more, we are doing everything we can to keep them dining out. In a climate where food costs are increasing, a further increase in prices that are out of our control is not what we need. Also, our restaurant Saba is disputing with Dublin City Council, a rates hike of 141%, water rates, increasing bin charges, FOG rates, as well as a plethora of charges and stealth taxes.
As well as the cut in VAT, the ‘The Gathering’ initiative has worked, we can see a huge increase in tourist footfall, which will only grow. The main reason for this growth is that we can now be price competitive on a global stage. It is an exciting time in the food business in Ireland but it is only in its infancy. It could be huge, but needs Government supports like this.
And that is why my colleagues in the industry are now scratching their heads in bewilderment as to why you Minister are thinking of scrapping the 9% Vat rate, which has been a lifesaver for our sector.
At a time when this country’s reliance on the tourism sector was never greater, any increase in a Vat rate ushered in as an emergency measure, would be tantamount to kicking the industry in the face and driving freshly honed nails into its coffin. Why you Minister are considering this is at best perplexing and at worst economic vandalism.
If you need any further proof why it’s a good idea:
1. Approx. 9000 jobs have been created in the restaurant/tourism industry since the VAT reduction in July 2011
2. An expected 5,000 jobs will be created in next 12 months if 9% VAT remains in effect
3. The restaurant sector employs 64,000 people (1 in 4 tourism jobs) and contributes a total of €2 billion to the Irish economy each year
4. The creation of 9,000 jobs has resulted in savings to the exchequer of €123 million to the Social Welfare bill. 9,000 jobs equates to 9,000 off the live register, 9,000 paying PAYE, PRSI and 9,000 spending in the Irish economy.
5. 9% VAT does not cost the exchequer €350million as estimated by the Dept. of Finance. A recent report from Deloitte/Fáilte Ireland and a separate submission report from ITIC found the cost was actually €90m (based on Revenue VAT receipts and CSO data)
6. The reduction in VAT has been passed on to consumers. Evidence is based on a Dept. of Finance analysis of the effects of the VAT change, published last December and based on CSO data for the period up to June 2012.
7. Improved value for money perception across all overseas visitors as well as Irish consumers
8. VAT MUST be retained into 2014 and beyond in order to remain competitive. By European standards, Ireland is at the higher end of the VAT rate, with countries such as Portugal at 6%, France and Germany at 7% and Greece at 6.5%.
9. Renewed growth in overseas tourism numbers and earnings. Overall trips to Ireland for the first seven months of 2013 were up by 6% compared to the corresponding period in 2012 (CSO 2013). 3,904,400 overseas visits to Ireland during the seven-month period.
Finally, Minister as a restaurant owner please keep the 9% VAT rate. We have a vital homegrown sector, which employs tens of thousands of people, please reconsider a negative policy U-turn that will inevitably cause job losses and seriously damage Ireland’s fragile tourism industry.