Small businesses have warned they may not reopen after the summer without support from the Government.

Fine Gael Senator Maria Byrne has called for the Government to respond by introducing a 9% VAT rate for SMEs as a matter of urgency.

Senator Byrne said new rights for workers such as additional leave, pension contributions and a higher minimum wage are welcome - but are putting small businesses under pressure.

She said reducing the VAT rate would help boost profit margin of businesses at risk of going bust.

“It has to happen sooner rather than later because many small businesses are in dire straits,” she said.

“A lot of businesses have closed down - but we cannot afford to let more close down.

“We have to try and be proactive and work with businesses to help to keep them open.

“We have to listen to their issues.”

Waiters serve at a restaurant. (AP Photo/Michel Euler)

Senator Byrne said the 9% rate could be applied exclusively to small businesses, while larger ones continue to pay the current rate of 13.5%.

“It should be places like hairdressers, it should be hospitality because of the different costs that they have incurred,” she said.

“Bringing down the VAT for them and keeping it for larger businesses who can absorb the costs can create a balance.”

Taoiseach Leo Varadkar told the Fine Gael Parliamentary Party earlier this year it would be possible to reduce VAT on restaurants and pubs, while maintaining the current rate for other businesses - such as hotels.

Main image: Money on a table with a receipt and wine glasses.