The new cafe at Kelly's Resort in Rosslare would not have opened if the VAT rate had remained at 13.5 per cent, according to its manager Bill Kelly.
“The VAT reduction to 9 per cent certainly allowed us to get back on the road again and I wouldn’t have opened the cafe if the VAT rate was higher,” he says.
“Since the reduction in VAT we have increased the number of people working in the hotel by 25 to 219. We peaked at 230 during the summer. In the middle of the crisis we had brought that down to about 185.”
He says it helps level the playing field for Ireland because other tourism destinations have lower VAT rates. “Portugal has six per cent and Greece has 6.5 per cent so for us it has been a huge plus.”
While VAT has reduced, food costs increased by more than 26 per cent since 2007 while ESB rose by 54 per cent and gas by 48 per cent. “These are enormous increases and it really was a matter of survival for many. We’ve certainly been making profits for the last number of years but we need to make profit to reinvest in our business going forward,” he says.
Sallyanne Clarke of L'Ecrivain restaurant on Dublin's Baggot Street says the lower VAT rate allowed some restaurants to keep their doors open through a very difficult period. She says the Michelin-star restaurant she runs with her husband Derry Clarke was hit earlier than others in the recession because it is at the top end of the market.
“We’ve been through the worst recession known to man, well, known to us anyway and we’ve been through a few recessions in 25 years. It has made the difference between surviving and not, basically,” she says.
It also allowed L’Ecrivain to retain its 32 full-time staff. “Things have only started to come around now and we are playing catch-up but if they were to rip that lower Vat rate from under us now there would be ripples through the whole industry and there would be job losses. We need this to stay at nine per cent to help an industry that has been on its knees.”
Bill Kelly says boosting the tourism sector will provide the rising tide to lift all boats. “Irish people spend €1 billion more on overseas holidays than they do here so if we can get more people to stay in Ireland it will create more employment, directly and indirectly.”
