9% Vat retention for tourism sector

The tourism industry has broadly welcomed the retention of the 9% Vat rate for the sector — but has been warned to pass on savings to customers.

Finance Minister Michael Noonan said the reduced Vat rate had contributed to an extra 23,000 people being employed in the sector since it was introduced in 2011, but warned tax relief must be passed on.

“In light of rising prices in this sector, it is incumbent on the industry to ensure this relief continues to be passed through fully to the consumer. However, let me be very clear: The taxpayer cannot be the only stakeholder keeping costs down in the sector. If prices begin to rise, the case for retaining the measure diminishes,” he said.

Earlier this month, Siptu called for the tourism Vat rate to be scrapped, claiming the benefits had not been passed on to either employees or the exchequer.

Fáilte Ireland chief executive Shaun Quinn said it was clear the measure was working. “It has been demonstrated time and again in recent years that when the Government invests in tourism, the country gets a healthy return economically, socially, and culturally. Our research has shown that since the Vat rate was originally cut to 9%, tourism has generated an extra 30,000 jobs.”

Fáilte Ireland also welcomed the retention of a 0% rate for air travel tax and the changes to the Employment and Investment Incentive scheme which will apply to tourism accommodation providers.

Irish Hotels Federation president Stephen McNally said the measure was one of the most successful job creation initiatives of modern times.

“The 9% Vat rate, in particular, is of enormous importance to the industry, helping to level the playing field for tourism businesses when competing with international destinations for visitors. This will continue to have benefits for the local economy, particularly in rural regions,” he said.

Mr McNally said recent research by the federation found that 98% of hotels and guesthouses said the tourism Vat rate was having a positive impact on their business, with almost three-quarters hiring new staff in the past year.

Restaurants Association of Ireland chief executive Adrian Cummins also welcomed the decision, saying it was crucial not only to restaurants and businesses in the tourism sector but also to job creation and regrowth in the economy.

“This is the correct decision by the Government. It keeps Irish tourism competitive, attracts overseas visitors, and most importantly allows for the creation of a further 50,000 jobs in the tourism and hospitality sector in the upcoming years.”


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