ONE local politician fears more closures of small coffee shops across Limerick after Budget 2025 rejected widespread calls to restore the sector’s VAT rate to nine per cent.
“This was the rate applied during Covid and was only increased to its original 13.5 per cent in August,” Independent Ireland TD Richard O’Donoghue told the Limerick Post this week.
Deputy O’Donoghue raised concerns over how many local businesses will be able to cope with the rate being restored to the pre-Covid norm, and has blamed the government for giving the sector nothing to sustain it.
“Not only has (the government) crippled the businesses that are trying to employ people in this country, it is now putting them out of business,” Deputy O’Donoghue insisted.
“I want to ask people from every one of the government parties, when they are visiting Limerick, to go around to the people in the hospitality sector and ask them if they are happy with the government. They are not going to be happy.
“The government parties have come up here for decades doing the same thing, but they have destroyed the people who actually put in the work and built communities and villages.”
The Limerick TD claimed that the last time the government raised the VAT rate from nine per cent to 13.5 per cent, it put 70cents onto the price of a cup of coffee.
“It put €4 onto a plate of food and now the government has done it again,” he said.
Deputy O’Donoghue’s views were shared by Kileedy native Michael Magner, who is head of the Irish Hotels Federation.
Mr Magner described the decision not to reduce the hospitality VAT rate as “short-sighted and extremely concerning”.
“These businesses are facing a perfect storm as they grapple with rising costs, the impact of the 13.5 per cent VAT rate, and very tight margins,” Mr Magner said.
“The bottom line is that inaction now poses an enormous risk to our wider hospitality and tourism industry which, as one of Ireland’s largest indigenous employers, supports over 280,000 livelihoods – some 70 per cent of which are outside of Dublin.”
