Taoiseach Micheál Martin has signalled a focus in the budget on rural Ireland and seasonal businesses in terms of the Government’s commitment to a 9 per cent VAT rate in the hospitality sector.
He told Independent Ireland leader Michael Collins in the Dáil that “your representations are heard” as the Cork South-West TD appealed for the VAT rate to be cut from 13.5 per cent to 9 per cent for the hospitality sector.
His comments follow calls for a more focused set of policy actions if the Government wants to help the industry.
The Taoiseach also said there would be “measures in respect of carers” as Social Democrats leader Holly Cairns appealed for the Government to bring an end to means testing for carers.
The Taoiseach if they increased funding for one category “by definition other categories may not get a similar increase or may not get an increase at all”.
They had to balance this and that was why ending means-testing for carers would be done incrementally.
The issues were raised in the run-up to Budget 2026, which takes place in the Dáil next Tuesday.
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Independent Ireland has repeatedly called for a VAT reduction from 13.5 per cent to 9 per cent for the hospitality sector, citing the 600 cafes and restaurants shut down last year.
Mr Collins said “the VAT rate has to drop or the doors will shut”.
He said the crisis the sector is in is so bad that a VAT rate drop “will not go to customers as a reduction. It will just help to pay bills, such as energy bills, that have spiralled out of control.”
The issue “cannot be kicked down the road any longer. We cannot allow these small, but effective businesses … just to shut their doors.”
The Taoiseach responded: “I do recognise this is a very important issue.”
He added: “People do need a break in terms of viability and that is where we are focused.
“You could have a crowded restaurant, but the margins might not be great when it comes to the owner’s bottom line. A lot of hard work goes into this industry and maybe the yield has not been what the hard work would deserve.”
He said he had been “hounded” by his own party TDs from “all the counties where hospitality is particularly strong in the summer period” on the issue of VAT.
He said the difficulties apply to urban and rural Ireland. But “there is no doubt there are certain counties, particularly given the seasonal nature of rural Ireland and holiday areas such as west Cork, Kerry and the west of Ireland, where it is a significant issue”.
On the carer’s allowance, Ms Cairns said removing the means test would cost €375 million a year. “The Government could more than pay for that by tripling the bank levy, which would raise €400 million.”
The Taoiseach said that the Department of Social Protection estimated the cost at €600 million. About 100,000 people receive the carer’s allowance and expenditure has gone from about €611 million to €1.24 billion, he added.
“The Government proposes to phase in the removal of the means test. And there will be broader progress made on income supports more generally.”