By Pádraig Hoare
The hotel and tourism industry has repeated calls to keep the 9% Vat rate, saying regions outside Dublin will be the biggest loser, especially Cork and Kerry, and with jobs at risk.
Despite the fact that hotel room prices have surpassed Celtic Tiger levels and that the exchequer is missing out on €500m yearly from the tax incentive, industry bodies are insisting there is more at stake, including thousands of jobs.
According to Department of Finance figures, estimates show that restoring the 13.5% rate for all businesses favoured by the lower rate since 2011 would result in an additional €527m in revenues to the State.
Reducing the 13.5% Vat rate, to 9%, was originally envisaged as temporary to bolster industries ravaged by the recession.
It has cost the State €2.7bn since its introduction, according to the department assessment. Opponents of retaining the 9% rate say that it has more than met its original target and that it should be removed, now that the hotel and tourism industries are thriving.
However, chief executive of the Irish Tourism Industry Confederation (ITIC), Eoghan O’Mara Walsh, said thousands of jobs in Cork and Kerry could be adversely impacted, if Vat was increased, with 34,000 employed in the industry in the south-west.
“Tourism is a vital economic engine within the south-west and everything must be done to protect and nurture it.
“The 9% Vat rate has been a key enabling factor for the sector’s success and any change in this is likely to damage the industry and depress demand.
“This would be very dangerous, particularly with Brexit looming. We hope that the Government sees that tourism is vital to the regions and leaves the Vat rate unchanged and reverses the cuts to Ireland’s overseas marketing budgets”.
The president of the Irish Hotels Federation (IHF), Michael Lennon, said that as Brexit looms, it “makes no sense to jeopardise Irish tourism further and hinder our capacity for growth”, when 16 European countries have Vat rates for hotels of less than 10%.
“With 70% of tourism jobs based outside of Dublin, tourism’s wide geographic distribution is critical to sustaining regional economies, and addressing the rural imbalance. And, as the biggest investor in Irish tourism, the hotels sector is playing a critical role,” he said.