Derry and Strabane Council is to write to the British Government over much higher VAT rates for the north’s hospitality sector compared to the south after a proposal from Sinn Féin councillor Sandra Duffy.
During June’s Full Council meeting councillor Duffy said that whilst hospitality plays a vital role in the local economy, the industry is under “significant pressures” including rising energy costs, food costs, staffing pressures, and insurance costs.
The Derry representative put forward a motion highlighting the 20 per cent VAT rate for businesses in the north, while businesses in the south are set to benefit from a reduced VAT rate of 9 per cent.
A successful motion tabled by Colr. Duffy stated: “Council believes this creates an unfair trading environment across the island and calls on the British government to urgently reduce the VAT rate for hospitality businesses in the north and bring it into line with the 26 counties.”
Council will now write to the British Chancellor and the Secretary of State seeking urgent action.
Councillor Duffy said the local hospitality sector does “much more than serving food and drink”, and is integral to creating jobs, supporting local producers and attracting visitors.
“So when hospitality thrives, our wider local economy benefits,” she said. “But the reality is that hospitality businesses are under serious pressure.
“They are facing rising energy, food, insurance costs, staff pressures, and all the wider costs of actually doing business. Many are still carrying the impact of COVID, then Brexit, then inflation, and now they are trying to survive in an extremely difficult trading environment; are being asked to compete by paying 20 percent VAT.
“Meanwhile, businesses in the 26 counties are set to benefit from a reduced flat rate of nine percent. That creates a really unfair environment across the island and in a border region such as ours, especially here in the north west, that matters.
“We’re not talking about abstract economic theory; this is real life for local businesses who are competing every day in an all-Ireland economy.”
DUP alderman Amanda Lynch supported the motion and noted that MP Carla Lockhart has called on the Treasury to lower the VAT rate for hospitality businesses.
SDLP councillor Rory Farrell also agreed that the VAT rate for hospitality “right across Ireland should be uniform”.
He added: “Dublin recognises the value, the importance, and the contribution of the sector and will reduce that tax burden to nine percent from July onwards. Meanwhile, the British Government is paying lip service to the needs of the hospitality businesses across the north and is stubbornly refusing to budge on the 20 percent VAT rate.”
“We firmly believe that there should be a level playing field.”
UUP alderman Darren Guy said Northern Ireland is being held back by the “tax differential with the Republic of Ireland”, and a reduced VAT would “act as a positive counter to concerns from businesses around the Windsor Framework”.
People Before Profit councillor Shaun Harkin did not support the motion and said a recent, similar Sinn Féin proposal in the Dáil had “much more clarity to it”.
“They argued that wealthy hotels should be excluded from the VAT cut and this motion doesn’t do that,” he said.
The motion passed with councillor Harkin and independent councillor Gary Donnelly voting against it, and all other members voting in favour.
