Significant rise in VAT will have disproportionate effect on rural businesses – Penrose

The increase of the special 9% rate of VAT to 13.5% will be clearly felt in rural hotels and rural pubs that have restaurants which allowed them to sell food on the premises, Deputy Willie Penrose said. 

“I have been contacted by people who operate rural bars and restaurants who indicated they were devastated by the huge increase in VAT upon their food sales,” he said.

“It is well known that rural pubs that have not adjusted or changed in recent years to provide food on their premises have been effectively faced with closure. 

“In my view, the special position of small establishments which provide local employment, has not been taken into account, as the main reason for the increase in VAT in the budget has been the fact that full bed occupancy of hotels in Dublin and other urban centers have been achieved, and they have been in a position to charge exorbitant hotel room pr ices, with more of the benefits accruing to their customers or staff. 

“I recall trade unions, and especially ICTU being vociferous in the regard. So in effect, small rural businesses have been lumped in with these large urban hotels, many of them corporations owned by vulture funds, when the decision to increase the VAT rate was made by the government. 

“Indeed, special treatment for these rural based businesses could easily have been accommodated, a graduated VAT rate introduced. 

“There is a precedent available in this regard, as I understand in relation to fees payable in respect of publican licences are graded to reflect levels of turnover – so something could have been formulated to avoid the significant increase in the VAT rate, which will have a significant impact on rural based businesses in particular.”