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Industry Slams SIPTU Call for Increase in 9% VAT Rate

Controversial comments have come under fire.

Controversial comments have come under fire.

The Irish Hotels Federation (IHF) and the Restaurants Association of Ireland (RAI) have slammed a recent suggestion by trade union SIPTU that the Government should scrap the 9% VAT rate, calling the proposal “Irresponsible and reckless”.

SIPTU has claimed that the VAT rate, passed as a measure in 2011 to help reduce the burden on the restaurant trade, has been of no benefit to industry employees or the exchequer.

The union has also said employers in the hospitality industry have refused to participate in talks for the creation of a new joint labour committee (JLC) aimed at setting pay rates and conditions for employees.  As a result, SIPTU is now calling on Finance Minister Michael Noonan to withdraw the reduced VAT rate until employers agree to engage with JLC talks.

The Irish Hotels Federation (IHF) has condemned SIPTU’s position as irresponsible and reckless. Stephen McNally, President of the IHF, stated that the Government measure continues to be one of the most successful job creation initiatives in modern times, helping to create more than 33,000 new jobs.

“Since its introduction back in 2011, the tourism VAT rate has been an enormous success in levelling the playing field for Irish tourism when competing with other international destinations. It continues to deliver much-needed employment creation across the country,” says Mr. McNally. “It’s time for SIPTU to act responsibly and stop jeopardising jobs.”

Mr. McNally states that, with wages accounting for 42% of turnover in hotels (one of the highest levels in Europe), the benefits of the tourism VAT rate have been felt directly by hotel employees in the sector who are among best paid and most protected in Western Europe.

Annually, Mr. McNally says the initiative results in an exchequer gain of €165m in social welfare savings and additional income tax. As a whole, the tourism industry now supports approximately 200,000 jobs – equivalent to 11% of total employment in the country.

Commenting on the JLC systems, Mr. McNally states that, while the tourism VAT rate supports employment growth, the re-introduction of the Joint Labour Committee (JLC) system jeopardises jobs by creating counterproductive inefficiencies and rigidities into the Irish labour market. He states that JLCs have lost all relevance since the introduction of the National Minimum Wage Act which has provided Ireland with one of the highest gross minimum wage rates in Europe.

Chief Executive of the RAI, Adrian Cummins said: “SIPTU have once again proved their removal from reality with their typical anti-job creation rhetoric. This call to reverse the VAT rate is directly hindering the creation of 50,000 jobs by 2020 which will be possible if the VAT rate is kept at 9%.”

Similarly, Independent TD for Dublin South–East Lucinda Creighton said the union had “Lost the plot”.  Madeleine Quirke, CEO Wexford Chamber, also attacked SIPTU’s comments as “Simply bizarre”.

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