Restauranteurs fear their businesses will go under if plans to restore the 13.5% VAT rate at the end of next month proceed.
A temporary reduction to 9.5% was introduced during the pandemic and extended under a suite of Government measures to address the costof-living crisis, but is set to expire at the end of February.
But restaurant owners say they are still being hammered by high energy costs and that the rate hike will come as a further blow that could tip them 'over the edge.'
Michelin-starred chef JP McMahon said that financial and staffing pressures recently forced him to close one of his three Galway restaurants.
"I think it's a bit premature," he said of the VAT rate restoration. "Even though we had a very busy year, it's impossible to know whether we are in the red or in the black because electricity costs have quadrupled and gas costs, so it's hard to tell.
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"I think it will send some businesses over the edge. I'm sure the Finance Minister [Michael McGrath] has done the maths, but if he puts it up and 70%, 80% of the restaurants accept it and 20% close, well then I suppose he's getting more money."
He added: "It is too early, let's just hold on. The industry is doing well. I don't see any problem paying tax and all those things but when you have people on a knife edge and Covid took a lot out of the industry...
"Everyone is drained in the hospitality industry; if there hadn't been Covid you'd be dealing with the war in another way."
Mr McMahon also said he thinks "it will send some businesses over the edge", adding: "I'm not saying us but I do know from talking to people in the industry there is still money owed to Revenue by restaurants from Covid because they allowed you to bank it.
"So there are restaurants that owe €100,000, €200,000, and I can't see how they can pay that back.
"Then if the VAT goes up 4%, that's a tax on the food; are they going to pass it on to the customer?
"We put our prices up so many times last year that I just gave up putting them up. I said: 'This is ridiculous!'
"Gas prices have come down but our electricity bill in [the restaurant] Cava [Bodega] went from €25,000 to €100,000 in a year."
He was hoping the restoration of the VAT rate would be delayed by at least another 12 months.
He said: "The reality is food is really expensive and getting more and more so. That's why you'll see really expensive items just falling off menus because restaurants don't want to buy them because they don't want to stock them because people don't eat them, then what do you do?"
He no longer serves beef fillet or striploin steaks and has replaced them with beef cheek and other cuts. Some fish, including turbot and sole, have also been dropped.
Mr McMahon said many in the industry are considering quitting. He closed his restaurant Tartare last year blaming a lack of staff, high energy costs and the price of ingredients, leaving him with Aniar and Cava Bodega.
Celebrity chef Dylan McGrath said: "Restaurants are under extraordinary pressure. Any elasticity has gone. It's very difficult to see how this works. It [the VAT restoration] is just going to close more restaurants."
A spokesman for Minister McGrath said several cost-of-living measures are due to expire at the end of February at the same time this VAT change will happen. He said: "[Mr McGrath] will consult with party leaders and the Government regarding the future of these measures in the coming weeks."
Last month, then Finance Minister Paschal Donohoe told the Dáil "no further extension to this measure is envisaged". He said that since its introduction in November 2020, it has cost €902million.
