Saturday, 28 September 2013

The Restaurant VAT Question

On Friday 20 September at 6pm I was at home having a quick coffee while listening to the RTE news before heading back to work in our restaurants. On comes that familiar droll voice of “Mr put everybody in a bad mood”, that’s Minister Noonan of course! And then, as cool as like he says, "I will be increasing the VAT rate in restaurants and hotels back to 13.5% and if you don't like that, you might tell me where I'm going to find the €360,000,000 its costing". First, I shouted at the radio, as if he could hear me and would listen to reason, then I sent a sharp and to the point text to my local TD, as if they could make him see reason, then I had a shower to cool off, as if that was going to help and then I went back to work.

I can speak as a restaurant owner who employs 40 people and tell you that increasing prices in the current economic climate is nothing short of commercial suicide. The restaurant trade in Ireland has suffered enormously during this recession and the last five years have been spent fire-fighting as we try to survive while the recession continued year after year. The reduction in VAT was a lifeline to many restaurants and any increase in taxes at this time will cost my industry dearly.

So what is going on?
Has the vat reduction cost Ireland Inc. €360,000,000 as Minister Noonan claims?  
Now remember, we have a government that spends vast amounts of money on advisors, studies and reports. A recent Deloitte report commissioned by Failte Ireland found that the VAT reduction created 13,499 jobs and when everything was accounted for the Exchequer saw a net benefit of €173,000,000! So it’s Happy Days Then? Well, not so, according to Minster Noonan who is still claiming its costing €360,000,000!

So can we take it that one of two things is going on?
Either the Minister believes Deloitte made a balls of their report and there are wrong in their findings or he is just telling porkies for his own political gain?

I recently asked a TD why their FG Minister for Finance was doing this and I was told “look, we’re politicians and this is what we do. He is just grandstanding and has no intention of increasing the Vat rate” you can make your own mind up on that sort of behaviour by our esteemed political leaders!

So let’s take it that the highly paid professional government advisors are indeed correct and the VAT reduction was a fantastic success, so what do we do now? Well to us mere mortals that would seem like a no-brainer! But for some bizarre reason our Fine Gael/Labour government would seem to have some sort of whacky alternative plan…….?

I despair!!!


(The Report) 

Annualised Assessment of the Impact of the VAT Reduction Measure
from 13.5% to 9%
Impact on Jobs *-1-
Employment in Accommodation & Food Services Sector Q2 2011 (70% of sectors benefiting from VAT intervention)
Employment in Accommodation & Food Services Sector Q2 2012 (following VAT reduction)
Employment Growth within 70% of sectors (benefiting from VAT reduction)
Employment Growth for 100% of sectors
Employment Contraction in similar services sectors over the period
Retention impact of VAT measure on 108,300 jobs over the period in 70% of sectors (benefiting from VAT reduction)
Retention impact of VAT for 100% of sectors
Total Jobs Created and Retained over 12 month Period in 100% of sectors benefiting from VAT intervention
Annualised Impact on Exchequer Finances
Average Annual Earnings in Accommodation & Food Services Sector *-2-
€ 26,500
Tax Payable (PRSI, USC, PAYE)
€ 4,280
Total Tax Payable
€ 57,775,720
Employers PRSI
€ 30,410,000
Total Employment Tax Raised
€ 88,185,720
Social Welfare Saving *-3-
€ 173,500,000
Total Saving
€ 261,685,720
Increased Economic Activity *-4-
Employers investment in new job salaries
€ 234,710,500
Assumed growth in sales based on reduced VAT rate and lower price to consumers – 300% of salary investment
€ 704,131,500
Additional VAT collected at 9% rate on increased consumer spending
€ 63,371,835
€ 325,057,555
This analysis does not take account of the increase in spending derived from €234m in new salaries created in the economy or the reduced spending incurred from €123m in lost salaries suffered without this intervention.
*-1- Department of Finance "Measuring the Impact of the Jobs Initiative - was the VAT reduction passed on and were jobs created"
*-2- CSO Earnings Hours & Employment Costs Survey (EHECS)
*-3- CSO Quarterly National Household Survey
*-4- REI assessment of additional VAT received based on increased economic activity

Friday, 6 September 2013

I Think We’ve Lost Temple Bar to Drunks & The Junkies

So what was I doing in Temple Bar anyway?
Well, last Saturday I finished work in Ouzos Dalkey and stopped to pick up the Sunday morning papers on my way home. There it was, the photo I had being hearing about all week. I never got to see because it had been deleted from Twitter as soon as it had been posted. Two Chefs, a meat cleaver and a food critics head held by the hair (photo shopped of course). I’m still tying to figure out why the critic would first claim to be so hurt by this photo and then have it published on page 1 and then an even larger version on page 5 of her national newspaper?  Don’t make any sense to me? The only comment I have to make on this latest episode is, if you are going to be a food critic and criticize others, you should first learn to take criticism of yourself and do it gracefully.

So it’s Monday, 8pm and myself and my wife are on our way to try this new restaurant in Temple Bar. As we turn at Christ Church down Dame Street there is a Garda standing on the left, radar gun in hand. Luckily we had a line of traffic in front of us. The speed limit is 30kph in the city and it is policed so no messing in the city on the speeding front.

We parked in the multistory car park in Temple Bar and emerged into the middle of this bustling tourist hot-spot. The first 50 steps were fantastic, the music coming from the pubs and lots of happy faces, the place was hopping. A little further down the street, opposite the Elephant & Castle everything changed. Two hard faced individuals standing in the middle of the footpath drinking cans of beer while their mate urinated against the wall in full view for all to see. We walked around them being carful to avoid the urine now making its way across the footpath and on to the road.

As we walked on I advised me wife to put her IPhone in her pocked for fear of being robbed. We walked past the Square and witnessed countless junkies in huddles and more hard faces drinking from cans while sat on the dirty ground. The streets were filthy and we felt seriously uncomfortable. As we continued we saw McDonald’s have opened where Frankie’s used to be. (We laughed later at the thought of Dublin City County Councilors complaining that McDonald’s would bring down the tone of the place.) I can honestly say I have never felt so uncomfortable in my home city and I was truly embarrassed to be Irish. I watched tourists look on in horror at the lawlessness of Ireland & Temple Bar. I can’t help but wonder if any of the tourists visiting Temple Bar will ever visit this country again, I wouldn’t!

Where in the World?
I have traveled to many countries and visited many cities in my 50 years and I can honestly say I have never witnessed such behavior. New York is a city vastly larger than Dublin and yet one can walk the streets of Manhattan and feel safe. The disgusting scenes we witnessed in Temple Bar would not be allowed to happen in New York.   

So Who’s to Blame?
We could blame the Gardai for not cracking down on such behavior.  There was no sign of the Gardai the night we were there. But lets face it, as a nation we do not protect our police force. It is common to have criminals walking the city with 100 previous convictions under their belts. Assaults on Gardai are common in Ireland and as a society we have done nothing to protect our protectors.

I blame the politicians; they control everything to do with policing and enforcement. If the politicians got behind the Gardai, reformed the legal system and built a prison system fit for purpose we would all reap the rewards. But sadly they don’t seem to care.

So my Advice….

Restaurant lovers
Visit Oliver Dunne’s new restaurant in the Clarence. He is a nice guy, one of Ireland’s great chefs, the staff are lovely, the food is fab and it’s a fine new restaurant. But get a Taxi to the restaurant door and straight back home, avoid Temple Bar at all costs.

As for any tourists visiting Temple Bar, this area has been lost to the drunks and the junkies, so be careful you’re on our own….

Take the tie off and take your wife and family down to Temple Bar some night, have a look around and ask yourself; Would I want to bring my family on holidays to this godforsaken place? And then for god’s sake do something about it!