Minister for Enterprise Peter Burke has denied the hospitality sector was ignored in the budget following his failure to secure a reduction in the VAT rate.
He said it should not be surprising to see a business minister “fighting for business” at the Cabinet table after his last-minute push to secure a cut in the rate failed.
Hospitality businesses and their representative groups have expressed profound disappointment that the 13.5 per cent rate of VAT was not returned to the temporary Covid-era 9 per cent level in Tuesday’s budget after a highly publicised campaign to pressure the Government into adopting the policy.
Speaking to reporters at a press conference on Wednesday in Government buildings, Mr Burke said he does not accept the charge that he has failed the hospitality sector.
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“I think we have responded very significantly,” he said, pointing to €167 million energy subsidy scheme for hospitality and retail businesses announced on Tuesday.
The Fine Gael TD said he had looked closely at the expected cost to businesses of upcoming regulatory changes. Against that backdrop, he said the decision to “push out” the pension auto-enrolment date to September 2025 was a response to those cost concerns.
Mr Burke did not deny he had pushed for the VAT rate reduction for food-led businesses or a cut in the excise duty for alcohol, in line with the Restaurants Association of Ireland’s and the vintners lobby demands. Neither measure was included in the budget.
Asked to explain the gap between what he believed the hospitality sector needed and what the Department of Finance agreed to in the budget negotiations, he said: “It’s absolutely no secret to see a business minister fighting for business...I think that’s a good thing, quite frankly.”
Minister Burke also asked why he pushed for the VAT cut, a costly policy, the economic justification for which has been widely questioned. In a report last year, the Parliamentary Budget Office said there was “inconclusive evidence” that VAT reductions are passed on to consumers or generate additional employment, with some economic literature identifying they instead merely boost profit margins.
“I met so many hospitality business across the economy,” Mr Burke said. “It was singularly their ask to try and assist them in terms of the model of trading and assist them with viability.”
However, he said he remains “confident” that Budget 2025 will lower the cost base for hospitality businesses “in terms of utilities”, and that will give them “a significant cash injection”.
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