Ictu steps up campaign for hike in Vat tourism tax
Ictu expanded on its pre-budget submission, saying there were a number of reasons why “the reduced Vat rate must go”.
It claimed “business is booming” in relation to the hotel industry, with Dublin room rates among the highest in Europe, adding that the reduced Vat rate had not benefited the consumer.
It said “the needs of citizens should be prioritised over a subsidy to profitable business owners”, with the exchequer losing out on an estimated €2.2bn since 2011.
Job growth increased in the sector because of an improved overall economy and not because of assistance from the reduced Vat rate, it said.
Wages in the industry have not improved since it was introduced, according to Ictu.
“Workers are not seeing the benefits of this subsidy — employers in the sector are,” it said.
It claimed the threat to smaller firms was “overstated” and that the Vat threshold “can be raised so smaller businesses are not affected”.
In contrast, the Restaurants Association of Ireland (RAI) chief executive Adrian Cummins said a Vat increase of even 1% could cost thousands of jobs.
RAI, in an analysis by economist Jim Power, found 4% of the jobs in the sector could be shed, which would equate to around 6,000 jobs, both part-time and full-time, if an increase of 1% in Vat was imposed.
Mr Power’s analysis found that rural areas would be disproportionately affected, the RAI said. The association said restaurants, in general, would suffer if visitor numbers from the UK continue to decline due to sterling weakness.
It said border counties’ restaurants were “particularly vulnerable to sterling weakness” as fewer people will come across the border from the North while customers from the Republic would have a financial incentive to cross the border.
Mr Cummins said any increase would cause damage to the economy of border counties and rural Ireland.
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