VAT cuts won't lower prices for customers, say NI hospitality leaders
Summary
Hospitality businesses in Northern Ireland want a cut in the value-added tax (VAT) to compete with lower VAT rates in the Republic of Ireland. Industry leaders say a VAT cut would help businesses survive but may not directly lower prices for customers. The UK government has refused the request, saying it would cost too much.Key Facts
- Hospitality VAT in Northern Ireland and the rest of the UK is 20%, while in the Republic of Ireland it is 9% on food and 13.5% on accommodation.
- Northern Ireland businesses face higher costs due to wage increases, taxes, and supply chain issues.
- Hospitality leaders say a VAT cut would help them offer better prices to tour operators and keep business from declining.
- The Republic of Ireland has changed VAT rates several times since 2011 to support tourism and the hospitality industry.
- The latest Irish VAT cut on food service is estimated to cost around €680 million per year.
- The UK government argues a VAT cut is expensive and may not help customers with lower prices.
- An economic expert suggested a trial VAT cut in Northern Ireland to see if it encourages investment, estimating an initial cost of £225-250 million per year.
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