The Irish Hotels Federation (IHF) has rejected recent media claims that a reduction in the 9% VAT rate for hospitality would cost the Exchequer €1bn annually, calling such reports "deeply misleading."

IHF Chief Executive Paul Gallagher clarified the scope of ongoing discussions between the sector and the Government: “In the lead up to the General Election and afterwards, discussions between hospitality representative bodies and the Government have always been on the basis that any VAT reduction would apply to hospitality food services only and not accommodation services.”

Gallagher dismissed reports suggesting otherwise as disingenuous, urging a more balanced debate: “It is time for a more honest, balanced debate - one that recognises the economic and social importance of hospitality food service businesses and gives them a fighting chance to survive.

“The true cost involved is significantly lower than the widely quoted figure cited by the Government in recent days.”

Data from the Government’s own Tax Strategy Group supports this position.

According to their figures, applying a 9% VAT rate to food and catering services would cost €674.6m.

A narrower focus on hospitality food services alone would involve an even lower expenditure.

This, Gallagher argues, opens up the potential for supporting both the hospitality sector and personal tax reductions in the upcoming Budget.

He added: “The Government’s narrative has had the effect, intended or otherwise, of driving a wedge between the public and the hospitality industry, framing the VAT reduction as a giveaway to businesses.

“This is extremely divisive and simply not true.

“The 9% VAT reduction sought would apply to prepared food services, such as meals in restaurants, takeaways, commercial kitchens and food served on transport.”

Gallagher stressed that the true beneficiaries are small, independent food businesses struggling to stay afloat amidst high inflation and margin pressures.

Only €64m of the projected VAT benefit would apply to the hotel sector.

“Reducing VAT on food services is not a handout to hospitality businesses – it is a vital intervention for a sector that supports over 270,000 livelihoods and contributes significantly to the economy.”