Rates and VAT ‘killing hotel industry’
Speaking at the federation’s annual conference at Cork’s Silver Springs hotel, IHF president Richard Bourke said the current rates system was unfair and hit hotels much harder than other businesses.
“The current system of rates involves a fixed charge, incurred annually, that is based on notional property values and bears no relationship to the size or scale of the business or its ability to pay,” said Mr Bourke. “For example, a small accountancy or legal firm could generate over €1 million in fees from a small office, whereas a 40-bedroom hotel, located in a much larger building, might generate a similar income but yet it will pay substantially more in rates.”
The IHF wants the rates system to be abolished and replaced with a local tax based on the income generated by each business. Mr Bourke said tourism was being blamed for ripping off customers but the Government needed to take responsibility for its part in bumping up running costs.
The federation also called on the Government to cut the VAT rate on accommodation and meals from 13.5% to 10%. IHF chief executive said the VAT regime was a “time bomb” for tourism because it placed hotels at a competitive disadvantage to rivals in other countries.
“The 13.5% VAT rate applied to accommodation and meals is a blockage to competitiveness and growth in its own right,” said Mr Power. “However, coupled with the fact that the Irish tax system prohibits the refunding of VAT on corporate hotel and restaurant expenditure, this regime puts the Irish tourism sector at a distinct disadvantage to other competing destinations.”
The conference was told that proposals to increase the minimum wage would also hurt competitiveness.
