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Tag: Budget2019

  • Budget 2019 leaves the price of alcohol untouched

    Budget 2019 leaves the price of alcohol untouched

    Minister for Finance Paschal Donohoe described the 2019 Budget as being “a caring budget”.

    It is the hope of Mr Donohoe and the Taoiseach Leo Varadkar that this budget can keep Ireland’s future secure.

    The main talking points of this year’s budget include, the rise in the minimum wage to €9.80 an hour, which will be in effect from January, the increase of social welfare payments by €5 from next March and the full restoration of the Christmas bonus.

    The price of cigarettes went up as expected by fifty cent, but the price of alcohol was untouched by the Minister for Finance, which came as a surprise to many. However, managing director of the off license chain, Next Door, Brian O’Sullivan was not surprised.

    “Obviously I was relieved to hear that they didn’t put up the price of alcohol, but it didn’t surprise me at all,” he said. “With the legislation expected to be put in place in the next three years or so, that is going to put minimum pricing on the sale of alcohol, I assumed that they wouldn’t touch the price of alcohol this year and it is great for us that they didn’t.”

    Surprisingly, Mr. O’Sullivan is more optimistic than pessimistic about the pending legislation.

    “I actually think it’s going to be great for off licenses. So often us at Next Door nationwide lose out on business to supermarket chains such as Tesco due to their ability to put on deals for alcohol that we simply cannot compete with.

    “I think that the minimum pricing legislation, when put into place is going to greatly benefit us. Many people see it as being more convenient to purchase alcohol at off-licenses than supermarkets and only tend to go to supermarkets when there are better deals on offer, so I am hoping when the good deals are no longer possible at the supermarkets due to the legislation, it will see a rise in business for us here at Next Door.”

    The Public Health Alcohol Bill, which will eventually bring in the minimum pricing legislation, was only passed last week after over 1,000 days of debate.

    Minister for Health Simon Harris called the passing of the bill “a groundbreaking measure” in what many are calling a landmark piece of legislation.

    “We are legislating for alcohol as it affects our health,” he said, “we know we have a relationship with alcohol in this country that is not good, that damages our health, that harms our community. This will help to change the culture of drinking in Ireland over a period of time.”

  • Hotel and restaurant chiefs slam VAT hike in 2019 Budget

    Hotel and restaurant chiefs slam VAT hike in 2019 Budget

    The price of hotel rooms and eating out are set for a major hike after the government announced that VAT rates in the hospitality sectors would increase to 13.5%.

    Irish hoteliers have slammed Minister for Finance, Pascal Donohoe, who announced on Tuesday that VAT for the sector would rise from 9% to 13.5% in the 2019 Budget.

    The Irish Hotels Federation (IHF) has branded the increase as ‘reckless’ and warns that Irish tourism will struggle to compete with cheaper European destinations.

    Over 235,000 people are employed in the tourism sector currently and the government aims to raise over €450 million with this latest tax rise.

    Michael Lennon, head of the IHF has pleaded with the finance minister to reconsider the measures until at least after the completion of Brexit.

    Speaking on Tuesday, Mr Lennon said: “Ireland will now have a higher tourism VAT rate than 26 countries in Europe with which we compete.

    “We are already a very high cost economy by international standards, so it is astonishing that the government is now imposing additional taxes on tourists and making our country less attractive as a destination.

    “Have no doubt, this increase will hurt tourism across the country but businesses outside of Dublin will be hit the hardest.

    “Regional businesses will bear the brunt, as about €300m of the €466m in additional taxes will be taken from the rural economy, which has been slower to recover from the economic crisis.”

    The current VAT rate of 9% was introduced in 2011 as a temporary measure to increase productivity in the tourism and hospitality sectors and Mr Lennon claims that the industries should be rewarded for growth.

    He said: “The government recognised the tourism industry’s ability to deliver on jobs across the country and we delivered, year after year, creating over 65,000 new jobs.  

    “We achieved this by providing a quality product, high levels of service and competing internationally for business every day.

    “Today the tourism industry supports over 235,000 jobs in every county and town, over 70% of which are outside Dublin, generating over €2 billion in taxes for the exchequer each year.

    “It is deeply disappointing and frustrating that despite the strong response of the tourism industry to the 9% activation measure, its economic contribution and potential is no longer of importance to government policy.”

    “We understand that government needs to raise taxes to pay for many social demands on the exchequer.

    “However, we have argued that the best way to generate the additional funds needed for public services is to support growth in those business sectors, such as tourism, which are contributing.

    “Time and again, tourism has shown itself to be one of the most effective ways to spread economic prosperity throughout the country and its successful recovery demonstrated its potential.

    Budget article 2
    While the increased VAT has aggrieved many in the tourism sector, TD Paschal Donohoe said that the initial low rate was a stop-gap measure // Cormac Byrne

    “Today’s short-term budget fix will have long-term implications for an important indigenous export industry and rural Ireland in particular.”

    Hotels and restaurants are not the only businesses that will fall under the new tax rate, with catering, cinemas, theatres, museums, amusement parks, hairdressers, horse racing and greyhounds all subject to the VAT  rise.

    Adrian Cummins, CEO of the Restaurants Association of Ireland described the government’s actions as ‘thoughtless’.

    He said: “This was the incorrect decision by government and had little economic intelligence behind the decision to increase the VAT, as did the report by the department in July which didn’t take consideration of Brexit or revenue generated by overseas tourists to Ireland.

    “VAT at 13.5% reduces Irish tourism’s competitiveness, resulting in less appeal to overseas visitors and, most worryingly, impacts the value for money offering which discourages people to spend their money in Ireland on Irish goods and services.

    “With Brexit on the horizon and the as yet unknown implications it may have on our sector, this decision has put the Irish restaurant industry in jeopardy.

    “This was an election budget paid for by the restaurant and tourism industry.”