REDUCED VAT RATE RESULTS IN 5984 NEW JOBS IN DUBLIN

REDUCED VAT RATE RESULTS IN  5984 NEW JOBS IN DUBLIN

Reduced VAT Rate results in

5984 new jobs in Dublin

Report by the Restaurant Association of Ireland

 

For Immediate Release

Monday, 6th October 2014

According to a report published by the Restaurant Association of Ireland, 5984 new jobs in the Food, Tourism and Hospitality sectors have been created in Dublin since the reduced VAT rate of 9% was introduced in July 2011. To highlight the scale of job creation, the Report compares the number of direct new jobs to a major local employer, revealing that the 5984 extra jobs created in Dublin is more than the combined number of employees also employed in Dublin by Google, Microsoft and Diageo.

Speaking about the launch of the Report and the success of the reduced VAT rate, Adrian Cummins, Chief Executive of the Restaurants Association of Ireland, said that “As this report proves, in terms of creating new jobs in the food and accommodation sector, the introduction of the new VAT rate in July 2011 has been a major driver of local employment growth. 5984 new direct jobs have been created in Dublin alone, with 21,633 new direct jobs created across the whole country.”

“This is a very conservative estimate and does not include the number of indirect jobs created in the wider economy as a result of the multiplier effect. When the multiplier effect is included, the total number of new jobs is even more impressive, with 8737 jobs created in Dublin and 31,584 jobs created nationally. More recent CSO figures released for Q2 show even greater employment statistic increases.” continued Adrian Cummins, Chief Executive of the Restaurants Association of Ireland.

“By lowering the VAT rate on food to 9%, the government has shown its commitment to the creation of jobs. In July 2011, we employed 32 people. Because of the implementation of the lower VAT rate, we were able to reduce our prices, and as a result we are serving more customers than ever. We currently employ 39 people and are still recruiting.  We have a very real concern that should the costs of doing business begin to increase, then we will lose the momentum that has been gained through this initiative” said Julie Shiels of Hartleys Restaurant, Dun Laoghaire, Co. Dublin

 

 

The Report entitled “9% VAT – Food, Tourism & Jobs – Rebuilding Ireland’s Economy” uses national employment data from the Central Statistics Office. The Report examines the impact of the introduction of the new VAT rate in July 2011, when it was reduced from 13.5% to 9% for tourism related services and goods.

The Report covers the direct and indirect number of jobs created, an estimate of social welfare savings as well as the increase in revenue for the Exchequer (e.g. PAYE, USC and PRSI Employer contribution) at a county and national level.

Key Findings from the report include:

The numbers employed in the Accommodation & Food Services sector in Q1 2014 stood at 37,783:

  • The gross annual wage bill paid to those employees is €875.5 million;
  • The net annual wage bill paid to those workers is €789.7 million;
  • The contribution to the Exchequer from employee taxes (PAYE & USC) is €85.8 million; and
  • The Employer PRSI contribution is €94.1 million;

The increase in direct employment between Q2 2011 and Q1 2014 was 5,984;

  • The gross annual wage paid to those extra workers is €138.6 million;
  • The net annual wage bill paid to those extra workers is €125million;
  • The contribution to the Exchequer from employee taxes (PAYE & USC) as a result of the increased employment is €13.6 million; and
  • The Employer PRSI contribution as a result of the increased employment is €14.9 million.

The number of people signing on the Live Register in County Dublin declined by 12,070, between June 2011 and June 2014.

Number of Indirect Jobs:

If the multiplier effect of 0.46 is applied to jobs in the Accommodation & Food Services sector;

  • A further 17,380 jobs are supported in the wider economy; and
  • The extra  jobs created in the sector between Q2 2011 and Q1 2014 resulted in the creation of an extra 2,753 indirect jobs in the wider economy; and
  • The total direct and indirect increase in employment between Q2 2011 and Q1 2014 was 8,737.

Estimated Social Welfare Savings:

The Report demonstrates the considerable social welfare savings made by Exchequer using the model that “for every 10,000 people off the live register, and back in employment, it results in a net gain to the Exchequer of some €200 million”.

The increase in direct employment of 5,984 in the Food & Accommodation sector in Dublin saved the Exchequer €119.68 million in social welfare payments.

 

Ireland’s Value for Money Rating Rises

On a national scale, tourism has also increased every year since the new VAT rate was introduced, with overall visits to Ireland rising by 17.82% since July 2011. There is further good news for Ireland’s tourism sector regarding Ireland’s Value for Money (VFM) rating as the number of visitors rating Ireland ‘good’ or ‘very good’ VFM has increased from 28% to 40% from 2009 to 2012 and the number of visitors rating Ireland ‘very poor’ or ‘poor’ for VFM has fallen sharply from 40% in 2009 to 16% in 2012.

ENDS


For more information, please contact:


Adrian Cummins

Chief Executive Officer

Mobile: +353 86 8263311

Telephone: +353 1 6779901

Email: adrian@rai.ie

Website: www.rai.ie

Twitter: @RAI_ie

 

More about the KeepVAT9 campaign:

Website: www.keepvat9.ie

Twitter: @keepvat9

Facebook: www.facebook.com/keepvat9

 

A full copy of the Dublin report can be downloaded here: 

Dublin Economic Report

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