Representatives of the Irish hospitality industry have expressed disappointment with the scale of the supports for the sector announced in Budget 2025 and the Government’s decision to retain the higher rate of VAT for the sector.
On Tuesday, Minister for Finance Jack Chambers and Minister for Public Expenditure Paschal Donohoe outlined a series of measures aimed at providing relief for businesses struggling with rising costs.
The Coalition declined to reduce the VAT rate for the hospitality sector from 13.5 per cent to 9 per cent, a move for which the Restaurants Association of Ireland and publicans’ groups have assiduously campaigned. Excise duty on alcohol will remain unchanged.
Meanwhile, a €4,000 energy cost subsidy will be made available to some 39,000 businesses in the retail and hospitality sectors, Minister Donohoe confirmed in his speech. The total cost of the scheme to the exchequer will be €167 million.
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The Department of Tourism will also have its annual budget increased by around €50 million to more than €1 billion, the Department of Public Expenditure and Reform confirmed. This additional allocation will include a €10 million increase to the Tourism Marketing Fund, which allocates funds to Tourism Ireland and Fáilte Ireland, to “ensure Ireland continues to be ‘seen’ in a highly competitive international environment”.
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Hospitality and tourism-adjacent businesses and lobbyists have hit out at the lack of targeted supports in the budget, however, as well as the Government’s commitment to raise the national minimum wage by 80 cent to €13.50 per hour from January 1st.
The increase, which is in line with the Low Pay Commission’s recommendations, has been fiercely criticised within the hospitality industry as a threat to the viability of businesses.
Michael Magner, president of the Irish Hotels Federation (IHF), expressed “deep disappointment” with the announcements, claiming Budget 2025 has failed to arrest a “commercial crisis” facing the food-led hospitality sector.
In a statement, he said: “The decision not to reduce the hospitality VAT rate is short-sighted and extremely concerning given the stark commercial environment that food service businesses are operating under throughout the country.”
Mr Magner said Government policy is now “fundamentally at odds” with the interests of hospitality and tourism in Ireland.
The Vintners Federation of Ireland, meanwhile, said Budget 2025 falls “disastrously short” of what is needed to protect an “industry on the brink”.
VFI chief executive Pat Crotty said: “The budget is a disaster for our sector. We have been clear with the Government about the immense pressure pubs are under, yet they have failed to deliver any meaningful support.”
Publicans needed the VAT reduction “to survive”, he said. “What’s worse, the minor supports Government is offering are nearly useless when you consider the soaring cost of doing business. Pubs are already closing their doors, and this budget will accelerate that trend.”
Adrian Cummins, chief executive of the RAI, said the lobby group will continue to “highlight how [the Government’s] policies are impacting food-led businesses”.
