The Government is being pressed to provide “significant” financial support for hairdressers, barbers and salon operators when they reopen after more than four months of enforced closure due to Covid-19.

Making the case for an aid package that would include tax concessions and a €3,000 reopening grant, the Hair and Beauty Industry Confederation says support will be needed for the foreseeable future as the sector has been closed all year after facing 22 weeks of shutdown last year because of the pandemic.

Ministers have suggested that personal services such as hairdressing could resume next month as restrictions are eased.

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“If such assistance is not forthcoming, many businesses will not survive, which will destroy jobs, undermine the health of the high streets around the country, and damage the exchequer finances,” said the confederation, which represents 2,500 operators.

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“The black market in hair and beauty services has prospered since March 2020, and the risk is that many clients may not return to legitimate businesses.”

Industry estimates suggest the sector supported almost 50,000 direct and indirect jobs before the pandemic. The group added that hair and beauty salons were a big driver of footfall in towns and shopping centres and contributed “in a positive way” to the streetscape.

A report by economist Jim Power for the confederation calls for prolonged VAT concessions and tax credits for consumers to encourage them to use such services. It wants an extension of wage subsidies and also debt write-offs.

Hairdressers already stand to benefit from a VAT cut to 9 per cent from 13.5 per cent that is supposed to remain in force until the end of the year. But the industry group said the reduction should apply indefinitely and be extended to include beauty salons, who do not qualify. Furthermore, it said a special 5 per cent VAT rate should apply for the sector until next year at the earliest to help it stabilise.

Tax credit

The group wants a “stay and spend” tax credit for consumers to use registered legitimate outlets, saying this would divert business from operators in the shadow economy who make no exchequer contribution.

Such a scheme should be introduced eight weeks after the sector reopens, to spur business after their initial return.

The group said the employment wage subsidy scheme, due to expire at the end of June, should be retained for the sector until the end of the year at least “and possibly to the middle of 2022”, depending on how restrictions evolve.

In addition, the group said the sector should also receive grants to meet once-off reopening costs and investment in personal protective equipment and rapid Covid-19 antigen testing.

“The grant should be equivalent to 50 per cent of commercial rates in 2019, subject to a minimum payment of €3,000.”

It added that many operators will suffer the legacy of accumulated rents, commercial rates, tax liabilities and bank interest costs after the lockdown.

“Furthermore, consideration must be given to writing off some of those accumulated financial liabilities.”