Between a Rock and a Hard Place –  NI stuck between VAT cuts in the South and Business Rates Reduced in England – with Nada for Northern Ireland

While one of the new PM’s first announcements was a welcome 20% cut in business rates for hospitality in England, and pubs in the rest of Ireland benefit from tax cuts – Northern Ireland’s already overstretched outlets are stuck in an ongoing vacuum – with no sign of the budget at Stormont being agreed by the Executive before the end of summer.

As excitement builds for the biggest event the city of Belfast has ever witnessed – just days away from the Fleadh which will see a welcome influx of around 800,000 people – the upturn of the Fleadh effect could be wiped out within weeks if no decisive action is taken up on the Hill.

The Burnham bonus for pubs, clubs and small music venues comes amid a series of measures that his Government has brought in to provide “breathing space” to the public and businesses as they experience cost pressures.

But only for England from next year.

The move will cost around £100 million a year and funds are planned to be raised for it by cutting business rates relief for vape shops and cracking down on online businesses that fail to pay VAT.

Due to our devolved political powers, however, these cuts in business rates won’t come into force in Northern Ireland unless Stormont agrees to mirror them.

The Republic of Ireland has already chopped the VAT it charges to the hospitality sector by one-third, lowering it to just 9%. Equivalent businesses in Northern Ireland have to pay 20% VAT.

Over Taxed and Under Valued

The contribution that the hospitality sector makes to the Northern Ireland economy is simply not sufficiently recognised. Take it all away and what offering could the 800,000 visitors to the Fleadh expect? The hospitality sector is the life blood of the city – yet the burden of tax, VAT, rates, rising costs and over-regulation leaves little room for survival. Every week we read about much loved places having to close their doors.

The Fleadh Effect

The Fleadh effect might keep the wolf from the door for a few more months, but winter is coming, and so is the tax man.

Simon McCance, Chef-Owner, The Ginger Bistro, said “Every hospitality business is facing the same challenge. Costs are rising faster than revenues. As independent operators, we’re constantly looking for ways to absorb those increases without passing them all on to our customers, but that becomes harder every month.

“A lower VAT rate and a fairer tax system on food would make a genuine difference. It would allow businesses like ours to invest in our teams, our premises and the overall customer experience. Hospitality contributes enormously to Northern Ireland’s economy and communities, and it’s time government recognised that through a fairer tax system.”

Stephen McGorrian – owner of Horatio Todds (which recently won the Pub of the Year title at the LCN Awards), the Northern Whig and Denvirs in Downpatrick told LCN “We’re getting taxed to death now. I met a British Minister at a recent dinner and he asked me what I did. I told him I used to be a publican, but I’m  now a tax collector. He didn’t like that.

“We definitely need a fresh approach. They don’t have enough fiscal powers at Stormont. They make a mess of a number of things, but to a large extent that’s because they don’t have the tools that they require.

“One of the biggest issues here is that there’s too many agencies – and there’s an awful  fear of people getting things wrong, so no one will make a decision. There’s a fear culture in our government. It’s all just too unnecessarily complicated.”

Charlotte (Lottie) Noren of Beau – which won the Newcomer of the Year Award told LCN “VAT is just mad at the moment – the more you make the more you pay. We would love to see it changed. It’s pushing places out of the market. The government really needs to find ways to reduce VAT – to safeguard our restaurants, to help keep menu prices down. It was reduced slightly in the South – the tragedy is that here you have all these beautiful small businesses being pushed out.

“On top of that, we are already paying rates to the Council – then we have to pay more to get our bins and waste collected. I thought paying rates was supposed to cover that? It just doesn’t seem fair.”