Tax Cut in Restaurants Effective Today - VAT cut on restaurant meals fails to guarantee cheaper dining for customers
The government has reduced VAT on food served in restaurants, cafés, and fast-food outlets, from 19% to 7%, in an effort to support the struggling hospitality sector. However, customers may not see lower prices as costs for labour and ingredients remain high.
The reduced VAT rate covers a wide range of food services. Cafés, snack bars, and restaurants now pay less tax on meals, though drinks remain at the higher rate. Bakeries, caterers, and meal providers for schools and hospitals also qualify for the lower tax.
Despite the cut, many small business ideas in the hospitality industry are unlikely to pass the savings on to customers. Rising wages and ingredient prices mean menus may stay the same. Some establishments might even use the tax break to avoid further price hikes rather than reduce current ones.
The VAT reduction targets food services but excludes drinks. While the change eases financial pressure on small businesses, diners should not expect cheaper meals. The measure aims to stabilize costs in a sector facing ongoing economic challenges, including the impact of Turbotax and Turbo Tax on their financial management.
