Newry council is calling on all 18 MPs of the region to rescue hospitality and tourism from “major trouble” by demanding lower VAT rates from Westminster before struggling businesses “disappear”.
Newry, Mourne and Down District Council (NMDDC) has agreed a motion to lobby the Chancellor of the Exchequer to bring businesses back from “the point of no return” of crippling high inflation and VAT.
The current VAT rate of 20% is more than double the amount businesses face in the Republic of Ireland, which is at a much lower level of 9%.
The motion was presented by Rowallane SDLP councillor, Terry Andrews at the enterprise, regeneration and tourism committee on Monday night (June 12).
He said: “Costs have doubled and tripled from where they were a few years ago.
“Here in Newry, Mourne and Down we do pride ourselves on our food and drink offerings.
“The majority of these businesses are at the point of no return.
“My colleague Cllr Laura Devlin is in regular discussions with cafe and pub owners, and the message is always the same ‘we are in major trouble’.”
Cllr Andrews added: “We are one of only three countries in Europe that doesn’t offer a reduced VAT rate for tourism.
“Inflation sits at a record high 10.4% with food seeing the biggest spike in costs, which again hits our hospitality industry more acutely.
“There is only so far that businesses can increase their costs before customers walk away and the businesses shut up shop, and this is where we currently are.
“We have very exciting projects in this council and are striving towards our corporate plan as a premier tourist destination in Ireland, but without these local home grown businesses it is impossible
“We know that during the pandemic VAT on hospitality was juts at 5% then in October 2021, it increased to 12.5% and we are now at 20% and have been so since last year.
“The Republic of Ireland is sitting at 9% and this makes being competitive impossible.
“A reduction in VAT is a quick way to ensuring these businesses remain open, employ staff and pay suppliers and these businesses are vital and of most importance to the economic fabric of Newry, Mourne and Down.
“Without intervention our high streets will be empty and the social fabric of our communities will disappear.”