When one of Northern Ireland’s most respected restaurateurs decided to open a second cafe he chose a location across the border in Dublin because of the UK’s taxation regime.
While Andy Rea, founder of the Mourne Seafood Bar, welcomed moves announced on Wednesday to allow the Stormont government to set a lower corporation tax, he said there were other barriers to launching a new enterprise in the north.
The business, based in one of the oldest quarters of downtown Belfast, had toyed with the idea of establishing a second restaurant on Northern Ireland’s picturesque north coast – a fast-growing tourist destination.
But Rea said that due to higher taxes, compared with the Republic, he opted instead for Dublin’s so-called “Google Quarter” at Grand Canal Dock – the European base for some of the world’s biggest technology companies such as Google and Facebook.
“Yes it is great that our politicians may be given the powers to set their own corporation tax,” Rea said. “If that meant 10% less to pay on our profits every year it would be a great help. But there are other taxes, that still cripple the tourism industry here, that convinced us to move south of the border.”
Rea said that alongside a lower corporation tax rate, political leaders in the devolved assembly should be fighting for a dramatic reduction in VAT on food and drink. In Belfast the VAT rate on food is 20%, whereas 100 miles south in Dublin VAT has been fixed at just 9%.
“It’s a no-brainer for anyone thinking about establishing a restaurant and not knowing if it should be in the north or the south of Ireland. The VAT rates are as offputting up in the north as the higher corporation tax rate.”
Set up nine years ago, the Mourne Seafood Bar has 100 employees in Belfast and now 20 in Dublin. It also runs a cookery school above its Bank Street headquarters in Belfast’s city centre.
“Tourism is taking off in Belfast and across Northern Ireland,” said Rea. “You can see it soaring due to attractions like the Titanic Quarter and the fact that Belfast has more individually run restaurants and cafes compared to cities in Britain. But then they maintain a crippling VAT rate on our food and lately Belfast city council raised the rates for all businesses.
“It’s brilliant that we might have a lower corporation tax, that we would pay less tax on our hard earned profits but there has to be other incentives as well. How can we compete with Dublin in terms of value for money for the growing number of tourists coming to Ireland if we are paying more than double in VAT up here in Belfast?”
