Neasa Hourigan
Question:163. Deputy Neasa Hourigan asked the Minister for Finance his plans to undertake a review of the VAT classification of hairdressers; and if he will make a statement on the matter. [41143/23]
View answerTuesday, 26 September 2023
Questions (163)
Written answers
In relation to the VAT rate applying to hairdressers, as the Deputy will recall, I extended the 9% VAT rate which applied for the tourism, hospitality and hairdressing sectors to 31 August 2023 from the previous end date of 28 February 2023. The VAT rate reverted to the 13.5% VAT rate on 1 September 2023.
It is not intended to reintroduce this 9% reduced VAT rate at this time. As you may know, officials from my Department compiled a ministerial briefing on a number of measures, including the temporary 9% VAT rate. This briefing included an economic assessment of the measure. This considered the macroeconomic backdrop to any extension of the 9% rate, noting that the economy has rebounded strongly from the pandemic and that economic activity is now above pre-pandemic levels. The briefing also noted that the reduced rate is both regressive and very costly, and that this cost represents a transfer from taxpayers to the sectors which it covers.
The Government accepted the Department’s economic assessment, which found that there was no longer an economic case for the temporary 9% rate, and, therefore, decided upon a reversion to the 13.5% VAT rate from 1 September.