Leitrim businesses react to ‘disappointing’ budget

Leitrim business people spent yesterday digesting the announcements of Tuesday's giveaway budget.

Those in the hospitality industry joined others in the sector in expressing displeasure at the Government’s failure to reduce the VAT rate. 

This comes after months of campaigning from hospitality groups who wished to see the 13.5 per cent rate of VAT returned to the temporary Covid-era 9 per cent level in Tuesday's budget.

“The call was strong for the VAT change and it didn’t happen so I know there will be disappointment amongst our members,” said Finola Armstrong-McGuire, President of Leitrim chamber of commerce.

In July, the Government’s Tax Strategy Group (TSG) said that returning VAT to 9% would take an “enormous transfer of taxpayers’ money” to businesses operating in these areas.

The lack of reduction to the VAT will continue to put pressure on food businesses who are struggling with the increasing costs of ingredients and energy.

‘Yesterday wasn't a good day for the food businesses,’ said Pascal Gillard, co-owner of Jinny’s Bakery in Drumshanbo. "We are not in the worst situation, we have a strong business, and we had a good summer, but coming into winter we just want to make ends meet.’

Another blow from the budget for food businesses is the increase in minimum wage which will squeeze their margins.

 ‘The minimum wage has gone up another 80c and in a cafe scenario, especially a cafe where you don’t know how busy you are going to be, having staff standing around for a number of hours in the day, and not many people coming through the door thats a difficulty… and we don’t begrudge (the workers) we understand, we are realists, but as a pen and paper exercise its not in it,’ said Pascal.

Pascal said that after hearing the budget announcements on Tuesday, they decided to close an extra day a week, on a Wednesday, which they had hoped not to do, but feel they have to.

‘You can't take the risk now, the minimum wage is high as it is, so having people standing around and you not busy, there's no point, you wont break even … I'm not crying, the business is strong but you have to be careful, you have to respond to what's out there, and that's what we are doing, we are looking at the long hall rather than the short term and for us opening Thursday to Sunday is what we are planning on doing and the VAT has a big impact on that.”

He also feels that with the VAT, the higher wages, and the ever increasing price of ingredients it will be difficult to keep prices low which leaves businesses in a tricky position. 

‘It’s going to be difficult to maintain the prices where they are at and it is going to be difficult to increase them, so it's a catch 22 … You need to raise your prices to stay profitable but you aren't going to be profitable if people are not coming in the door’

Despite the VAT remaining the same and the minimum wage increasing the budget did offer support for businesses with USC tax dropping from 4% to 3% and an energy subsidy of €4000 being offered to help mitigate electricity costs.

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