Budget 2021: VAT reduction will help but hairdressers 'need more support'

Budget 2021: Vat Reduction Will Help But Hairdressers 'Need More Support'
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The VAT reduction will go “some way” to helping hairdressers, but the Government could have done “much more” to help the sector, a hair salon owner has said.

Minister for Finance Paschal Donohoe announced a reduced VAT rate for the hospitality and tourism sector including hairdressers from 13.5 per cent to 9 per cent.

Mr Donohoe also unveiled financial supports for businesses impacted by Covid-19 restrictions.


Under the Covid Restrictions Support Scheme, Mr Donohoe said the Government would make a payment to businesses of up to €5,000 a week “based on their 2019 weekly turnover, to provide support at a difficult time”.

The scheme is aimed at businesses hit by lockdown restrictions, in sectors such as the arts, recreation and entertainment, and will generally operate when Level 3 or higher restrictions are in place.

Laura Grufferty, who owns the House of LA in Athy, Co Kildare, welcomed the VAT changes, but she said the Government was only making “themselves look good” by introducing more financial support schemes.

She added that it was becoming increasingly difficult to make ends meet, despite the support measures being announced by the Government.


The reduced rate will come into effect from November 1 and will remain in place until the end of next year.

The current rate for the hospitality sector including short term guest accommodation, restaurants, cinemas, theatres, hairdressers and barbers is 13.5 per cent.

Mr Donohoe said that he had chosen to introduce this at the “earliest possible moment” to allow those businesses that are currently open to benefit.

Ms Grufferty said the VAT rate should never have gone above 9% for hair salons.


“That vat hike [to 13.5 per cent] crippled a lot of salons pre-Covid,” she said. “So the reduction will probably help a little bit. But the Government could have done much more to support businesses that are struggling.”

She added that the Government needed to simplify its support schemes.

“They’re unrealistic unless you’re closed because of a lockdown,” she said. “It’s easier to get them then but when you’re open and you’re trying to make ends meet it’s really hard.

“They keep saying they are handing out money but the rigmarole that you’ve to go through is so difficult,” she said.


“The government is making themselves look good and then when you try [to avail of them] you realise you’re not entitled.”

Minister for Public Expenditure Michael McGrath also announced €500 million in additional spending measures to support businesses and communities.

Mr McGrath said this was in addition to the tax measures announced by Mr Donohoe.

He also announced a further commercial rates waiver for the final quarter of this year at a cost of €300 million.


Ms Grufferty said the surge in the number of Covid cases in recent weeks had made it really difficult to operate as people were afraid to go to salons when the Government was recommending that people limit their social contacts.

“How can people support businesses when they’re being told to stay in and stay away from places,” she asked. “Your hair is your last thing on your mind, really,” adding that even though customers were staying away she still had the same costs each week.

She is now anxious that operating her salon the rest of the year was going to prove even more difficult than when the pandemic first started.

“I’m just find it very, very difficult since we came back,” Ms Grufferty added. “There’s no help for someone like me. We need a circuit breaker now so that we know that we will be open in December and that we’ll have some income in the run up to Christmas. “

Further coverage on Budget 2021:Full details of an 'unprecedented' €17bn budget to support business, jobs and health Key points at a glanceReaction from the Opposition, business and industryWhat this year's budget means for the average worker

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