IHF seeks a 5% VAT rate from Government in Budget 2021
The Irish Hairdressers Federation (IHF) is seeking a reduction in VAT for hair salons from 13.5% to 5% in Budget 2021, which is the key recommendation in the organisation’s recently published pre-Budget submission.
“In the context of all of the pressures on the sector at the moment and the very uncertain outlook, it would be very supportive of the hairdressing sector to cut the VAT rate to 5% until the end of 2021, and then revert to the 9% that prevailed prior to the increase in Budget 2019 on a permanent basis,” it stated.
“The cost of reducing the VAT rate to 5% is estimated at €57m in a full year. Depending on the incidence of the tax cut, such a move could help business margins; increase consumer demand; sustain employment; and, crucially, remove some of the competitive advantage of the informal sector, which is operating outside of the tax system. The main benefit of the last VAT reduction was that salons reduced their prices, and this created increased consumer demand, and more regular visits to the salon.”
Other recommendations in the submission include the introduction of a flat rate subsidy for trainee hairdressers to address the 7.9% decline in total numbers employed in the sector; and fast-tracking the introduction of the National Hairdressing Apprenticeship to provide a nationally recognised professional qualification.
“As we learned during the lockdown, hair salons are a vital thread in the fabric of local communities, especially in rural Ireland,” said IHF president Danielle Kennedy.
“Our proposals are aimed at supporting these local salons, generating economic activity in small towns and villages, and creating new jobs for talented young people. Our submission has received a great response so far from officials in Government, and we look forward to working with them constructively in the days and weeks ahead. As a sector, we were struggling with severe job losses before the pandemic, and we are appealing to Minister Donohoe to engage with us and consider our submission. It is not just about hairdressers, it is about supporting local communities all across Ireland to get back on their feet.”
