Manx businesses say Isle of Man hospitality sector is 'in crisis' due to rising costs

A number of business owners in the Isle of Man say the hospitality sector is 'in crisis', as a result of rising costs and labour shortages.

Members of the Licensed Victualler's Association (LVA) met last week with 74 hospitality venues, after a number of businesses closed their doors for good over the last few months.

Mark Davison has been running 'The Tea Junction' cafe in the centre of Douglas for the last nine years, but has been forced to close his doors due to financial pressures.

He said: "I set this place up to get me out of the office nine years ago, and we did that, and it's been a roaring success.

"And after ten years, I should be in a position where I've got a business that I can sell on to somebody. The business just isn't worth anything because it's not making any money."

Mark said the closure was a result of 'rising wage costs, coupled with a turbulent inflationary world'.

Mark Davison has been running The Tea Junction in Douglas for the last nine years. Credit: ITV Granada Reports

Andy Saunders runs the 'Quids Inn' pub on Douglas Promenade, and believes the sector is at breaking point.

He said: "The Isle of Man Small, a medium Private businesses are in crisis at the moment. We are seeing many of our friends and families fail business wise, and it's not an issue of poorly run businesses, it's an issue that very much appears to be from a poorly run the economy."

In February, the island's government announced a rise in income tax from 20% to 22%, targeting what it called the 'squeeze middle'.

When asked about the effects of the budget, Andy said that the government have 'disproportionately burdened our lower-paid workers', adding that it is 'unacceptable that someone earning the proposed minimum wage of £11.45 per hour would be taxed at the new highest rate of 22%.'

Andy Saunders is a lead representative of the Isle of Man's Licensed Victualler’s Association Credit: ITV Granada Reports

The Isle of Man's Chamber has been campaigning around how VAT, rising costs, and labour shortages are having a 'devastating impact on the sector'.

The rate of VAT in the Isle of Man is 20%, mirroring the UK, but different to that of the Crown Dependencies.

In Jersey, it sits at 5%, while in Guernsey there is no VAT or any other consumption tax.

Speaking in the House of Keys, treasury minister Dr Alex Allinson said reducing VAT rates would lead to higher taxes elsewhere.

Both he and the enterprise minister Tim Johnston are due to meet representative of the LVA on Monday.

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