Press Release

SIPTU calls on Government to end VAT benefit for hospitality sector

Date Released: 13 August 2015

SIPTU has called on the Government to commit to removing the preferential VAT rate currently enjoyed by the profitable hotel and restaurant sector that includes many businesses that are exploiting low paid workers.

SIPTU Division Organiser, John King, said: “According to new figures released this week the hospitality sector is booming. A new independent survey by accountancy firm Crowe Horwath indicates that the average profit on each hotel room in Ireland grew from €7,347 in 2013 to €9,201 in 2014. This massive upturn for the industry in recent years is also backed up by research published by Fáilte Ireland which confirms that visitor numbers continue to increase year on year. They also show that tourists are staying longer and spending more during their visit.

“Despite the overwhelming evidence of a significant upturn, employers in the sector represented by the Irish Hotels Federation and The Restaurant Association of Ireland are defying Government policy and refusing to engage in the Joint Labour Committee (JLC) process which seeks to ensure workers receive a fair day’s pay for a fair day’s work.”

King added: “The Government introduced a 9% VAT rate for this sector in 2011. This has enabled increased profits. However, when the Government has sought to ensure that workers also benefit from this upturn, through the creation of a JLC for the hotel and restaurant sector, the employers' groups have point blank refused to engage.

“This is not only an insult to the Government and workers but also damages Ireland’s reputation with international bodies such as the International Labour Organisation (ILO). In order to prevent the exploitation of workers in the hotel and restaurant sector the ILO, which includes representatives of employers groups, trade unions and governments, adopted ILOC172 Convention which states that collectively bargained sectorial wage setting mechanisms are essential. The Irish government which is a signatory to this Convention met its obligation with the provision of the JLC system. However, the refusal of employer groups in the hotel and restaurant sector to co-operate in creating a JLC is placing the Irish state in breach of this Convention.

“The Government must state clearly that if the Irish Hotel Federation and the Restaurant Association of Ireland continues to subvert Government policy in this area the preferential VAT rate for the hospitality sector will be ended in the October budget. This situation needs to be tackled now, otherwise the Government’s entire strategy on protecting low paid workers is in real danger of being undermined.”


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