Budget 2022 and the path ahead for hospitality

Comment & Opinion

RAISE THE BAR Drinks Industry Group of Ireland wants the Government to slash alcohol excise tax to help support the hospitality sector.

Hospitality industry facing major post-Covid challenges

THERE is no doubt here in Mayo we have enjoyed a very busy summer tourism season since the lifting of Covid restrictions. Westport in particular has been a hive of activity over the last number of months. Things will no doubt become a bit quieter during October and November, before another anticipated boom for Christmas.
However, the hospitality sector is now a very different sector to the one that existed pre-Covid, and there are huge challenges to face for 2022.
Analysis released last week by the Drinks Industry Group of Ireland (DIGI) has warned of a two-tier recovery in 2022. The organisation feels weakened tourism demand will have a big impact on employment in particular.
DIGI’s estimates are based on analysis of a recent industry employment report, Structure and Performance of National and Regional Employment in the Hospitality Sector of Restaurants, Hotels and Public Houses – researched and authored by DCU economist Anthony Foley.
Foley’s report shows that the short-stay accommodation and food-service sector, which includes most drinks and hospitality businesses, employed almost 180,000 people in the last quarter of 2019.
However, DIGI predicts negative impacts from overseas holidays eating into staycation demand, residual consumer reluctance, and overall weaker national and international demand for travel and tourism. In light of this, it maintains that some pubs, restaurants, and hotels will not return to their pre-pandemic employment levels in 2022. In fact, the analysis shows that as many as 3,730 jobs could be lost in Mayo, Roscommon and Galway.
In response, DIGI has called for the Government to reduce Ireland’s excise tax rate on beer, wine, spirits, and cider by 7.5 percent in October’s budget. There does seem to be merit in this proposal, as we have the second-highest rate in Europe.
DIGI says this reduction in excise tax would have an immediate impact and mean more money for businesses. This would in turn help the business to weather what is likely to be a difficult year and, potentially, maintain current staffing levels, hire new staff, invest in premises and improve product and service offerings to the benefit of domestic and international consumers.
Crucially also, the reduction in excise tax would require no new legislation or EU approval, meaning the Government could introduce a new rate overnight.
Budget 2022 is a hugely important opportunity for the coalition Government to be inventive and forward thinking. It faces pushes for change from a whole host of different sectors, and demands for leadership to help solve some of the problems that loom in a post-Covid society.
Having stumbled from problem to problem during the pandemic, the Government now has a clearer pathway. It must now take the lead and show us the way forward.