Restaurants across the country are in crisis and in some cases are facing closure.
The warning comes from the Restaurants Association of Ireland, which is calling on the government for a permanent reduction in the VAT rate to 9% in this year's budget.
Paul Lenehan President of the Association says the sector is in real financial crisis
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"We need it desperately," he said, "Business is tough enough as it is. The last couple of months have been tight and I don't think people will really realise until they've done their VAT returns what an extra 4.5% is going to represent.
"It's huge and it's critical," Mr Lenehan added, "Margins are already as low as I've ever seen."
