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MP calls on government to lower VAT in restaurant sector

Algarve Socialist (PS) MP Miguel Freitas is calling on the government to reduce VAT from 23% to the original 13% for the restaurant sector.

Since January, restaurants in Portugal began charging VAT at the highest rate of 23%, in line with the government’s austerity programme.

In the March 16 issue, the Algarve Resident reported that an average of one restaurant a day was closing in Portugal, according to data from the Association of Hotels, Restaurants and Related Businesses in Portugal (AHRESP).

In January and February, 52 insolvencies were registered in the restaurant sector, 68% more than in the same period in 2011 (31 insolvencies) and 174% than in 2010 (19 insolvencies).

The AHRESP predicted that 20,000 businesses would close and 47,000 jobs would be lost during 2012 and 2013 as a result of the tax increase, which “does not serve the interests of the country nor its tourism industry”.

Miguel Freitas says the PS party has taken the matter to Parliament for voting as he says only the lowering of the VAT rate to the original 13% will help the restaurant industry, which is one of the main sectors for the Algarve economy, and the region, which currently has the highest unemployment rate in Portugal at 20% (see last week’s issue of the Algarve Resident).

He said: “We hope the government will correct the gross mistake it made when it decided to increase VAT to 23% and thus avoid an irreversible crisis in the restaurant sector in the short term.”

The PS project was handed into Parliament last Friday and is expected to be voted on.