A North Clare restaurant owner claims that companies in the hospitality sector would be out of business if they continued to pass on price increases to customers.
It follows this week’s announcement that the 9% VAT rate for the sector will be extended for another nine months.
Businesses here are among those calling for a further extension of the lower rate until the end of next year.
The 9% VAT rate for the hotel sector was introduced as a Covid measure and was due to rise to 12.5% in August, but in a move welcomed by the industry, the Government announced this week that the lower rate will be extended until February 28. 2023.
The measure, which is aimed at helping businesses, including cinemas, theaters and museums, cope with rising costs, will cost the state 250 million euros.
However, businesses here are among those in the industry calling for the VAT rate to be extended further to allow them to “level the playing field” after the pandemic.
The owner of the Monks restaurant in Ballyvaughan insists that companies cannot recover the losses of the last two years in a matter of months while dealing with inflation.
Patrick O’Donoghue says that continuing to pass on price increases to customers would drive them out of the market altogether.
The vice president of the Clare Tourism Advisory Forum says that businesses are currently absorbing additional costs, but warns that hidden costs will need to be addressed.
The operations manager of Durty Nelly’s in Bunratty, Maurice Walsh, says the hotel industry is in crisis right now.