The government is under pressure to provide “significant” financial support to hairdressers, barbers and salon operators when they reopen after more than four months of forced closure due to Covid-19.
Advocating for an aid plan that would include tax breaks and a € 3,000 reopening grant, the Hairdressing and Beauty Industry Confederation says support will be needed for the foreseeable future, because the area has been closed all year after facing 22 weeks of closure last year. because of the pandemic.
Ministers suggested personal services such as hairdressing could resume next month as restrictions are relaxed.
“If such help is not provided, many businesses will not survive, destroying jobs, undermining the health of the country’s shopping streets and damaging the finances of the Treasury,” said the confederation, which represents 2,500 operators. .
“The black market for hairstyling and beauty services has flourished since March 2020, and the risk is that many clients will not return to legitimate businesses. “
Industry estimates suggest the sector supported nearly 50,000 direct and indirect jobs before the pandemic. The group added that hairdressers and beauty salons were a major factor in footfall in cities and shopping centers and contributed “positively” to the streetscape.
A report by economist Jim Power for Confederation calls for extended VAT breaks and tax credits for consumers to encourage them to use such services. He wants an extension of wage subsidies and also debt cancellations.
Hairdressers are already expected to benefit from a reduction in VAT to 9 percent from 13.5 percent which is expected to remain in effect until the end of the year. But the industry group said the reduction should apply indefinitely and be extended to beauty salons, which are not eligible. In addition, he said a special 5% VAT rate should apply to the sector until next year at the earliest to help stabilize it.
Tax credit
The group wants a “stay and spend” tax credit for consumers to use registered legitimate outlets, saying it would hijack the activities of underground economy operators who do not contribute to the treasury.
Such a scheme should be introduced eight weeks after the sector reopens, to stimulate businesses after their initial return.
The group said the wage subsidy scheme, which was due to expire at the end of June, should be maintained for the sector until the end of the year at least “and possibly until the middle of 2022”, in depending on the evolution of restrictions.
In addition, the group said the sector should also receive grants to cover one-time reopening costs and investments in personal protective equipment and rapid Covid-19 antigen testing.
“The subsidy is expected to be equivalent to 50% of commercial tariffs in 2019, subject to a minimum payment of € 3,000.”
He added that many operators will suffer the legacy of accumulated rents, trade rates, tax obligations and bank interest charges after the foreclosure.
“In addition, consideration should be given to writing off some of these accumulated financial liabilities. “
