The Government has announced a wide range of supports for the ailing Tourism and Hospitality industry in Budget 2021.
Among the measures unveiled by Finance Minister Pascal Donohue are a VAT reduction for hotels, bars, restaurants and cafés, along with financial supports for businesses impacted by Covid-19 restrictions.
VAT will fall from 13.5% to 9% from 1 November. The decrease will remain in place until December 2021.
Businesses that have had to close or limit access, due to Covid-19 restrictions, will be eligible to apply for payments of up to €5,000 per week, based on their 2019 average weekly turnover.
That scheme will commence immediately and will run until the end of March.
Budget 2021, includes an comprehensive package of measures for a sector that supported 260,000 jobs before the pandemic. It includes direct compensation for closures, cash grants and €336 million of tax cuts.
Last Friday, as the final details of the budget were being examined by officials, the first meeting was convened of the Hospitality and Tourism Forum. It was co-chaired by Catherine Martin, the Minister for Tourism, and Leo Varadkar, the Tánaiste and Minister for Business. The sector pleaded its case, and now believes the politicians have listened.
“The Tánaiste stayed for 1½ hours listening to our concerns,” said Eoghan O’Mara Walsh, the chief executive of the Irish Tourism Industry Confederation. “There was hope after that meeting that they had got it. The budget today was proof that they got it.”
The Government has cut the sector’s VAT rate from 13.5 per cent to 9 per cent for the next 14 months which, at a stroke, effectively adds 4.5 percentage points to the margin of every operator in the industry, or at least the ones that are open. Businesses whose revenues fall by more than 80 per cent whenever restrictions go to Level 3 or above will be able to claim up to €5,000 per week in State compensation.
Wage subsidies have been extended until the end of next year. Local authority rates have been waived until the end of this year. Fáilte Ireland has been given €55 million for cash grants for the worst-affected businesses, and €5 million has been set aside to fund new tourism capital investment projects. The reaction from industry operators was swift and effusive.