The spotlight will be back on the current VAT rate for the food and hospitality sector as fresh calls will be made in the Dáil this week for the government to reinstate the 9%VAT rate that was temporarily in place.

Roscommon-Galway TD, Michael Fitzmaurice, will bring a motion to the Dáil calling for the government to "permanently" reduce the rate from 13.5% to 9% in order to "ensure the survival of food service businesses across the country".

The government introduced the 9% VAT rate on a temporary basis in November 2020 because of the impact of public health restrictions put in place during the pandemic on the tourism and hospitality sectors.

The estimated cost of this measure was in the region of €1.2 billion.

The VAT rate or the food and hospitality sector was restored to 13.5% in September 2023.

However Deputy Fitzmaurice will highlight in the Dáil that the hospitality sector, particularly restaurants, cafés, and pubs, continue to face "severe challenges".

He believes that these businesses have been "hit hardest by the spiralling costs of energy, food produce, insurance, and labour".

According to Deputy Fitzmaurice, they have also faced supply chain disruptions and staffing shortages which he said has left "many food-led establishments teetering on the edge of closure" and "over 600 food-led businesses closing in the past year alone". 

He said: "The 9% VAT rate provided critical relief to the food service sector during the pandemic, allowing many businesses to stay afloat.

"The decision to raise it again is placing unsustainable pressure on restaurants and cafés, many of which simply cannot survive under the current conditions.” 

Deputy Fitzmaurice's motion will highlight key issues for the food and hospitality sector including:

Inflationary pressures;
Post-pandemic struggles;
Economic Importance of food-led businesses in rural areas.

Ahead of the Dáil debate the TD has highlighted what he has described as the success of "similar VAT reductions across other EU member states" to support the food service sector.

The motion is backed by the Restaurants Association of Ireland (RAI), which has strenuously called for the 13.5 % VAT rate to be reduced.

Deputy Fitzmaurice has said that if the government does not take "immediate action" on the VAT rate there is a risk that "hundreds more food-led businesses" will be lost in the next year.

"This would mean not only the loss of jobs but the loss of vital services in communities up and down the country. A permanent reduction in the VAT rate is the lifeline these businesses need," he warned.