Offaly TD's pre-budget report on small businesses seeks 'targeted' 9% VAT rate

A new pre-budget report launched by Offaly Fine Gael TD John Clendennen has highlighted the serious pressures facing small and medium sized businesses, and called for the introduction of a targeted 9% VAT rate for certain businesses, excluding hotels.

Deputy Clendennen this morning (Thursday) launched his report, 'Backing Business', which was informed by over 600 responses to a business sentiment survey carried out last month.

One of the key findings of the report was that two-thirds of the businesses which responded were "unsure or not confident" about the outlook for the future of their business.

The report, which was launched by Deputy Clendennen alongside Enterprise Minister Peter Burke and Minister of State for Small Business Alan Dillon, outlines "Fine Gael's vision for a set of targeted policy interventions" in the upcoming budget.

Amid calls for the reinstatement of a previous 9% VAT rate for certain hospitality and retail businesses, the report recommends "a targeted reintroduction" of the 9% rate to exclude hotel accommodation.

It said Fine Gael will be seeking to "reduce the current VAT rate of 13.5% to 9% on food and food services, admissions to entertainment venues and hairdressing."

Deputy Clendennen is a former president of the Vintners Association of Ireland, and his report also called for measures to support the pub trade.

"Specific to on-trade licensed vintners, as Ireland has one of the highest rates of excise duty on alcohol in the EU, consideration should be given for the implementation of an excise rebate scheme up to 40% on draught products including beer and cider served in the on-trade establishments up to a maximum annual limit of €20,000 per pub," stated the report.

Other recommendations in the report included "a commitment that future minimum wage increases will be indexed to inflation," as well as proposals for addressing rising energy and insurance costs. An expended role for Local Enterprise Offices across the country was also proposed.

The report pointed out that small and medium-sized enterprises (SMEs) account for 95% of businesses and employ two thirds of the private-sector workforce, but that they now "face a precarious balancing act amid structural headwinds, unintended cost escalations and a fragile recovery landscape."

Commenting on its launch, Deputy Clendennen said: "This report draws on responses from over 600 business owners who were surveyed.

"All are citing labour costs, soaring energy bills, rising insurance premiums and heavier tax demands as serious pressures which threaten their viability.

"It's very evident that there must be decisive measures in Budget 2026. SMEs are the backbone of our economy and our communities. But today, too many are living with crippling uncertainty.

"Almost two-thirds of business owners tell us they don’t know if they can keep going. That is a stark warning Government cannot ignore.

"What businesses need most is predictability. They can deal with change, but they cannot plan for the future when every year brings new costs and unknowns.

"In a time of economic challenge and uncertainty, it is essential this Government does everything it can to protect jobs," he concluded.