VAT Reduction
Help us campaign against Government imposed food price inflation in hospitality.
On 1st September 2023, the Government increased the level of VAT applied to food served across hospitality. Effectively they imposed a 50% increase on the VAT rate, with it going from 9% to 13.5%.
Since then, the implications for the industry have been obvious. Barely a day goes by without hospitality businesses closing their doors for good.
Across hospitality there has been widespread agreement that the most effective means of helping the sector was for the Government to return the VAT rate back to 9%.
This would create a margin for these hospitality businesses to address the many other Government imposed charges that have been put in place - all of which are putting the industry under financial strain and leading to many hospitality businesses going to the wall.
The LVA has been engaging with the politicians on this issue and encouraging them to support a reduction in VAT. We will continue to do this with the next Government.
Recent research conducted by the industry showed that 77% of hospitality business reported a negative outlook for the next 12 months.
While a survey conducted by the LVA in 2024 showed that almost 1 in every 2 Dublin pubs who serve good say the VAT increase has led to a drop in their business.
The same survey also found:
- Since the VAT increase was imposed, 42% of Dublin pubs who serve food say the VAT increase has led to a reduction in lunch and dinner orders
- Three out of four pubs (73%) who serve food increased their prices on the back of the VAT hike introduced by the Government last year.
- This has led to a €1 increase per average dish in 24% of the food pubs, a €1.50 jump per menu item for 22% of these pubs and a €2 hike on average for 17% of pubs.
While there was great disappointment across the hospitality sector when the Government made no effort to address our concerns in Budget 2025, the battle to reduce VAT continues.
Some of the main political parties included measures saying they would reduce VAT in their manifestos. We believe they should be reminded of these commitments and will continue to press for a reduction.
We would encourage members to continue to raise this topic with any politicians they have interactions with. The Oireachtas needs to understand the hospitality sector will continue to press them on this matter until a satisfactory solution is delivered.
