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Karina operates a small restaurant called Waves in her hotel - Junior Cycle Business Studies - Question 17 - 2019
Question 17
Karina operates a small restaurant called Waves in her hotel. The government has announced that the current 9% VAT rate for the hospitality sector will be increased ... show full transcript
Worked Solution & Example Answer:Karina operates a small restaurant called Waves in her hotel - Junior Cycle Business Studies - Question 17 - 2019
Step 1
State one effect, for restaurant owners like Karina, of this increased VAT rate.
Answer
With the increase in VAT from 9% to 13.5%, Karina will have to pay more tax to the government on the sales of her restaurant. This increase in taxation may lead her to raise the prices of her menu items to cover the additional costs associated with the VAT hike.