Energy supports welcome but tough year ahead, says VFI

The Vintners’ Federation of Ireland (VFI) has welcomed the introduction of a Business Energy Support Scheme, stating that the survival of many pubs is conditional on the successful and timely implementation of the scheme. While the scheme will bring some relief to publicans the overall prospects for the trade remain depressed as costs continue to increase while consumers’ disposable income shrinks.

However, the VFI says the decision not to extend the special hospitality VAT rate of 9% past February 2023 will be a devastating blow to publicans serving food and will have massive consequences for the trade throughout next year. In a period of soaring inflation, businesses will be forced to increase prices at a time when their customers are in the middle of a cost of living crisis.

The Federation is also disappointed the Government refused the opportunity to reduce the alcohol excise rate – the second highest in Europe – stating it was a missed opportunity for the tourism sector and for small pubs where a lower excise rate would help pubs survive the coming winter.

VFI Chief Executive, Paul Clancy, says: “We welcome the introduction of a Business Energy Support Scheme to help mitigate soaring energy costs. Our members are dealing with 300% increases in electricity and gas costs so it was essential Government introduced such a scheme given the genuine concern within the sector about the viability of trading during the winter months.

“While we welcome the scheme’s announcement, our members will be anxious to learn the full details about how they can ccess the scheme so we are urging Government to publish registration requirements immediately. Publicans and small businesses need clarity and certainty today.

“We also note the scheme is only guaranteed ‘over the winter months’ according to the Finance Minister. Most experts agree the energy crisis will continue for at least two years so we welcome the fact Government has committed to reviewing the need for support measures in the new year. If energy costs continue to increase supports will have to be extended.

Paul Clancy continues: “The increase in the hospitality VAT rate is extremely disappointing for our members who serve food. At a time when inflation is running rampant and the cost of doing business is going through the roof our members will have to increase prices for customers who are already shell-shocked from the effects of the cost of living crisis. There is a genuine fear in the trade that when VAT reverts to 13.5% next March many customers won’t be able to afford the price increases.

“The refusal to reduce the alcohol excise rate is another missed opportunity that successive governments have ignored. We have the second highest excise rate in Europe, which places our tourism sector at an extreme disadvantage when competing for inbound tourists.

“As business costs increase and consumers’ disposable income decreases we are going to see extraordinary pressure on pubs who are caught in a trap they are powerless to escape from,” concludes Paul Clancy.

Finally, the VFI welcomes the announcement that the excise fee for Special Exemption Orders (late night licences) is being reduced to from €410 to €205.