Hotels Vat rate hike risks ‘tens of thousands of jobs’ Finian McGrath
A minister has warned that budget plans to hike Vat rates on hotels, B&Bs, and restaurants to 11% must be scrapped because the move will put “tens of thousands of jobs” at risk.
Disabilities Minister Finian McGrath hit out at Finance Minister Paschal Donohoe’s plans for next Tuesday’s budget amid growing concerns the row could undermine the Coalition’s budget plans.
As revealed in yesterday’s Irish Examiner, the Independent Alliance’s Mr McGrath and Fine Gael’s Mr Donohoe clashed during Tuesday’s Cabinet meeting over the leaked Government Vat hike initiative.
Cabinet sources said Mr McGrath told the Cabinet meeting that increasing the 9% Vat rate to 11% may “screw businesses”.
Fine Gael figures have suggested the move could raise €526m in additional tax revenue and claimed the row was “bizarre, to say the least, one week out from the budget”.
Mr McGrath yesterday confirmed he and the Independent Alliance are entirely opposed to the Vat rise — officially saying it must be scrapped.
“In my constituency I have a lot of small businesses, restaurants, small hotels — small hotels that have major concerns around this issue.
“The key thing here is this is a scheme that has worked for the last couple of years since the crash in the economy; thousands of jobs have been created — why would you do anything to damage that,” asked Mr McGrath.
“I totally accept Minister Donohoe’s view that it’s a handy €400m to nip and it’s one tranche of money, but the bottom line is it could affect tens of thousands of jobs.”
The issue dominated yesterday’s budget meeting between Mr Donohoe and the Independent Alliance quartet of Mr McGrath, Transport Minister Shane Ross, Skills Minister John Halligan, and OPW Minister Kevin Boxer Moran.
It is understood the alliance has been given the green light for its new gambling tax, which will see up to €50m ringfenced for addiction treatments and mental health services.
Mr Donohoe also met with Fianna Fáil finance spokesman Michael McGrath and public expenditure spokesman Barry Cowen.
It is believed Fianna Fáil is continuing to seek significant increases in affordable housing funding, and greater housing assistance payment supports, while it has demanded the likely €600m health budget is shored up without service cuts.
Although no agreement has yet been made on housing, it is understood Mr Donohoe may be looking at using corporation tax as a partial way to address the health overspend crisis.
Mr Donohoe is still due to finalise budgets for Housing Minister Eoghan Murphy and Health Minister Simon Harris, while sources said initial discussions are still taking place with Children’s Minister Katherine Zappone.
Brexit, Foreign Affairs, and Agriculture budgets are also still being examined.
