'VAT cut's a hambungler'

IT'S been called the “McBudget”, as fast food chains will benefit from a massive tax reduction while the average Joe has been left with nothing.

- CIARA O'LOUGHLIN

The hospitality sector is the big winner of Budget 2026 as a long-awaited VAT reduction will come into place in July.

VAT rates will be dropped from 13.5% to 9% but experts are saying it won't save the sector.

Announcing the Budget, Finance Minister Paschal Donohoe said the reduction “reflects the Government's commitment to support businesses in the services sector who are facing increased cost pressures”.

Over half of the money set aside for taxation measures goes towards the VAT reduction in a year that workers saw no changes to income tax bands.

The drop in tax for the sector will cost the Exchequer €232m next year and €681m every year after that, as the Government hopes it will help support 150,000 jobs.

Hotels and pubs that don't sell food are excluded from the tax reduction.

Hairdressing services will also benefit from a VAT reduction from 13.5% to 9%, as salon owners warned that the industry would collapse amid spiralling costs.

While the Restaurants Association of Ireland said it warmly welcomes the announcement, it has criticised that it won't come into effect until July 2026.