Taxes based only on hotel size are ‘completely out of touch with business reality’

TAXES imposed on hotels by local authorities have been labelled antiquated, anti-business and anti- competitive by the Irish Hotels Federation (IHF) president, Annette Devine.

Speaking yesterday at the IHF’s 69th annual conference in Cavan, Ms Devine said local authorities extract taxes relative to the size of premises without any reference to the level of turnover or overheads of the business.

“This is completely out of touch with the reality of business today. Thanks to technology and greater efficiencies, many businesses and professions generating substantial turnovers operate out of significantly smaller premises. The reality is that the hotel sector is disproportionately subsidising local authorities and their services,” she said.

Tourism generates over €5.9 billion annually for the economy of which €2.7bn goes to the Exchequer, representing 3.1% of GNP. This provides an underlying benefit to local authorities in terms of local business and income generated, according to the IHF.

“We remain disappointed that the current Government has continued to ignore this anomaly whereby local authorities could be generating more income through a more equitable local taxation method rather than focussing the burden largely based on property size instead of on profits of a business.

The IHF president gave an example of a different taxation system. She suggested increasing corporation tax to 12.25% plus a portion of personal income tax to the financing of local authorities.

“This would be more equitable than the current rates system,” she said.

“The next Government must address the unfair targeting of the property- owning business sector and consider the introduction of a more equitable regime that takes into account income rather than scale of premises,” said Ms Devine.

“In the interest of competitiveness and our sector’s growth potential, we wish to urge a review of the commercial rates system to reflect more appropriately the reality of business in modern Ireland,” said Ms Devine.

Meanwhile, delegates at the conference heard sales by the website operated by the IHF, irelandhotels.com, had reached €10m since its beginning in 2004.

The non-for-profit website handled about 32,000 room-nights worth €4m to its hotels and guesthouses throughout Ireland last year.

This represented an increase of 35% in room bookings and 29% in revenue on 2005 and the IHF suggests that over €6m in revenue will be generated through the site in 2007.