The Economic Case for the Retention of the 9% Hospitality Vat Rate for Restaurants, Cafes, Pubs and Other Food Services

The public finances are strong. Desired public expenditure is not being curtailed by financial limitations. It is a wonderful opportunity to establish the 9% VAT rate as the permanent restaurant and other food services rate. The sector is a large national and regional employment and economic contributor. It provides atypical employment opportunities to specific groups and individuals that are not provided by several other sectors to the same extent. As evidenced in this document, much of the expenditure on elements of food services sector is not in the luxury and discretionary sector. Takeaways and “normal” cooked food will face price increases as well as the more expensive food servings. The sector is primarily a small and micro enterprise sector and has faced many substantial difficulties in recent years from Covid, general inflation and specific business cost increases including energy.

We believe the overall food services sector is not sufficiently robust and profitable at present to absorb the proposed VAT increase without negative consequences. Government policy is increasing costs for restaurants. To balance this the 9% VAT rate should be retained.