Now is not the time for a VAT hike.

The Restaurants Association of Ireland (RAI) says that one in five restaurants across the country could be forced to close for good unless the VAT rate remains at nine percent.

According to a new report commissioned by the Association and conducted by Tony Foley, Associate Professor Emeritus of Economics, Dublin City University Business School, there is a strong economic case against the proposed hike from nine percent to 13.5%.

The organisation has highlighted the negative impact of recent high energy and other inflation on the business model of restaurants and also claims that the recovery from Covid, which decimated the restaurant sector, is incomplete.

🚨9% Vat

Research conducted by @Failte_Ireland – Covid-19 had a disproportionately detrimental effect on tourism and hospitality.

Notwithstanding the role Government supports played in keeping firms afloat, it is estimated that lost revenues in the sector totalled €6bn

— Adrian Cummins 🇮🇪🇪🇺 (@adriancummins) February 9, 2023

“The government needs to re-evaluate their plan to raise the VAT Rate for the hospitality sector by 50 percent as this hike comes in conjunction with various constraints such as the end of the Temporary Business Energy Support Scheme (TBESS).” said Adrian Cummins, CEO of the Restaurants Association of Ireland.

“Thus, leaving restaurant owners, many of whom identify as SMEs, to battle pressures on margin and by our estimate putting one in five restaurants at risk of closure due to a VAT increase.”

The RAI is asking the government to extend the reduced nine percent VAT rate until the end of 2025, to ensure the restaurant and pub sector “can continue to recover from the Covid-19 pandemic while simultaneously weathering rising input costs due to inflation.”