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Budget 2021: Government considering VAT rate reduction for hospitality sector

The Government is considering a reduction in the VAT rate for the hospitality sector ahead of th...
Marita Moloney
Marita Moloney

12.33 10 Oct 2020


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Budget 2021: Government consid...

Budget 2021: Government considering VAT rate reduction for hospitality sector

Marita Moloney
Marita Moloney

12.33 10 Oct 2020


Share this article


The Government is considering a reduction in the VAT rate for the hospitality sector ahead of the publication of Budget 2021 next week.

That's according to the Tánaiste and Minister for Enterprise, Trade and Employment Leo Varadkar.

The industry has been one of the hardest hit by closures during the pandemic and has called for a VAT cut from 13% to 9%.

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The Tánaiste said a reduction is being considered, as well as the potential to extend the commercial rates waiver.

Speaking on Down to Business with Bobby Kerr, Mr Varadkar said it was "heartbreaking" that people working in the hospitality sector had been laid off during the week for the second time this year.

He suggested a change in approach to funding supports for firms that remain closed due to COVID restrictions.

He said: "I think in the Budget we're going to need some sort of mechanism that is put in place to provide them with some sort of funding every week or every month that they're closed to help them with their fixed costs.

"Restart grants have been helpful but it's a tool that has probably reached its limit.

"I think we're going to have to do something different for businesses that have essentially been put into hibernation or put in suspension because of the restrictions."

Budget 2021: Government considering VAT rate reduction for hospitality sector

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It comes as the former Chair of the Fiscal Advisory Council said he does not expect "unduly harsh measures" in next week's Budget.

The Government announced yesterday that it is forecasting a budget deficit of €21bn this year due to the COVID-19 pandemic.

However, it will borrow large amounts in order to meet the demands rather than large tax increases or spending cuts.

Seamus Coffey told Newstalk Breakfast that the Government's ability to borrow money at favourable interest rates mean harsh measures aren't likely.

He said that "as long as the ECB keeps the taps open there shouldn't be pressure to implement unduly harsh measures".

Main image: A man sitting among empty seats outside the Metro Cafe in Dublin City Centre. Credit: Leah Farrell/RollingNews

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