Call to cut Vat rate in North

More than 2,000 jobs could be created if the Vat rate on hotels and visitor attractions in the North is cut to 5%, a report for the tourism industry has shown.

Hospitality businesses pay Vat at a rate of 20% — more than twice that of the 9% in the Republic.

EU law prevents member states from setting different levels of the charge for different regions. That power will be repatriated to the UK after Brieta and the DUP is pressing for a speedy cut.

Howard Hastings, managing director of Hastings Hotels, said currency fluctuations between sterling and the euro are not grounds for long-term business decisions.

He said: “Vat is structural and would kick-start our tourism economy and these numbers understate the potential for delivery of more accommodation into Northern Ireland and the delivery of upstream benefits.”

The study, carried out by Nevin Associates, is the first to look at Northern Ireland statistics separately from the rest of the UK.

A cut in the Vat rate for visitor accommodation and attractions would reduce the UK Treasury income by £4.2m (€4.75m) in the first year; however, over a five-year period the exchequer would gain by £32m, rising to £109m over a decade, it said.

Tourism-related businesses in the North pay 20% Vat.

Ciaran O’Neill, president of the Northern Ireland Hotels Federation, who runs Derry’s Bishops Gate Hotel, said room rates at hotels in Donegal had risen faster than in his city.

“Because hotels in Donegal have a better margin, they are able to price in a way that we cannot compete with,” Mr O’Neill said.

The study also shows that in the Republic average spend per visit, at £350, is almost double that of the North.

The report forecasts that the cut would be worth £332m to the UK’s balance of payments over a decade.

Colin Neill, chief executive of Hospitality Ulster, said: “It really is about being competitive.

“At the minute we are uncompetitive in the European market.

“It is time our ridiculously high Vat rate was reduced in line with many other countries, including the Republic of Ireland. Indeed, 17 of the 19 EU countries have tourist Vat rates below 10%.”

Press Association