Report Bolsters IHF Anti-VAT Increase Campaign

by | 23 Jan 2023

Report calls increase potentially “fatal” to vulnerable industry 

The Irish Hairdressers’ Federation has warned that the impending rise in VAT is ‘potentially fatal’ for many of its members. The damning conclusion is from a report and submitted to the government that backs its case for VAT to be reduced to five per cent. Salon business owners will see the nine per cent rate rise to 13.5 per cent in February. 

The Fatal Cut, a report prepared by Octavian Economics, points out that the Irish government has reduced VAT to support struggling industries before, even cutting VAT on newspapers to 0 per cent. Unlike with other industries, hairdressing as a service can never be digitised. 

The authors go on to outline the hairdressing industry’s considerable value to society, from strengthening communities to providing education and employment, to supporting local businesses and fighting the shadow economy.

The cost of living crisis, as well as the rising costs salon owners have faced beyond VAT in recent years — including energy prices and employer obligations — all add to the authors’ conclusion that the hike is potentially fatal for the businesses of many IHF members. 

In addition, the report highlights that the government’s own 2018 research shows the 2011 VAT cut helped to spur a 25 per cent employment increase. 

According to IHF president, Danielle Kennedy, ‘’a failure to support our industry at this critical time will push many salons to close for good, putting thousands of people at risk of unemployment and depriving elderly and rural communities of one of the few remaining hubs for community engagement. The hair industry is not just a major contributor to local economies around Ireland, it helps keep countless main streets alive and is a huge part of local communities.’’ 

Vice president Lisa Eccles added: “We are asking for support for an industry that is really struggling. Salons are closing all around the country and with the additional measures that have been introduced this year like minimum wage increase, statutory sick pay and pensions schemes, owners are crippled. By giving us a five per cent VAT we can use that extra four per cent to help us to fund all the new employer obligations for 2023.” 

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