On Tuesday 9th October, the minister for Finance announced that the VAT rate for hairdressing services would be going up to 13.5% from 9%.
This VAT increase of 4.5% is coupled with a rise in the National Minimum Wage from €9.55 to €9.80 which is an increase of €0.25 per hour plus a rise in the rate of employers PRSI contribution.
Sometimes it feels like the Salon Industry in Ireland is never taken seriously. It always gets lumped in with the overall Hospitality sector – like Hotels. And no disrespect to those industries – but the salon industry is nothing like them.
For a start, those businesses rely massively on tourism. Whereas less than 5% of the salon business does.
When the announcement of the VAT rate increase came out, I had to read 4 articles before it was even mentioned that hairdressing was also affected. Even though the sector employs nearly the same amount of people!
Hairdressing is one of the few remaining high street businesses that has survived the changes the internet has brought the last 20 years. If you go to any town or large village in Ireland there is a salon providing employment and a source of social glue to bring people into town on a regular basis.
In the last 5 years, tourism has boomed in Ireland, and naturally, hotels have made a lot more money as a result. Just ring any hotel in Dublin to see how much their rates have gone up. But this doesn’t mean the same thing is happening for salons. Of course, business has picked up from the nadir of 2010 but so has rent and wages (much more quickly than the number of clients).
As the Hairdressing Council of Ireland says, this VAT increase will only serve to migrate valued clients into the already very active black market. The industry over the years has seen limited support to eliminate a thriving black economy which is in direct competition with legitimate businesses, it is time to change this and stamp out black market activity nationally. It is time the Government really supported the industry.As a result of this VAT increase, the loyal salon client will endure increased prices from January 1st 2019, which will reduce their average spend, directly impacting the income of salon workers and owners.
It is about time this industry was taken more seriously for all the benefits that it provides to communities and rural Ireland.
On 23rd October at 1.30pm, the Irish Hairdressing Council is holding an Industry Call to Action on the Dail to protest this increase in VAT.
Phorest as always fully supports the Irish Salon Industry, I urge you to participate.
