Noonan softens stance on raising tourism Vat rate
Leo Varadkar, the tourism minister, said the 9% rate introduced as a temporary measure in the last budget “has been one of the Government’s most successful jobs stimulus policies”.
The previous 13.5% rate is due to kick in again next year, but TDs are concerned that this will lead to widespread job losses in the pub, restaurant, and hotels trade.
Mr Varadkar added his voice to the debate, telling the Irish Examiner: “I would not like to see it withdrawn too quickly or too soon.”
However, he said it was a matter for Mr Noonan and accepted it would be “tough” to find the €360m in taxes that it would cost to retain the 9% rate.
There is now growing expectation in Government circles that Mr Noonan could opt for a compromise rate of 10% or 11%.
He appeared to soften his stance yesterday, saying “there’s no decision yet, or indeed very little Government discussion” on whether to revert to the 13.5% rate.
“We’re all aware of the very strong lobby. It was a very successful initiative — it actually created 15,000 jobs and we are examining what the options are,” he said.
“A decision will be made closer to the budget.”
This marked a departure from his comments in the Dáil on Wednesday when he said the 9% rate “costs a great deal of money”.
He said it was introduced as a “pump-priming” measure, “where something is weak, one gives it a break to make it stronger”.
Kerry South Fine Gael TD Brendan Griffin said it would be “ideal” to maintain the rate at 9%, but if this was not possible, the minister should look at other options — below 13.5%. An owner of a medium-sized hotel in his constituency told him he would have to lay off four staff if the old rate came back, and a pub owner said he would have to lay off one.
Mr Griffin suggested lap dancing clubs, for example, should have to revert to the 13.5% rate.
Labour TD for Cork South West Michael McCarthy said the 9% rate has been a “major contributing factor” to the 6.5% rise in overseas visitors in the first eight months of this year.
Meath East TD Helen McEntee (FG) said maintaining the 9% rate was “a crucial factor” in the survival of hotels and restaurants nationwide.
If Vat for services is raised from 9% to 13.5%:
- A three-course meal, without drinks, that costs €82 would be €86.
- A one-night stay in a five-star hotel that now costs €181 would be €190.
- A bag of chips which might be €2.29 would be €2.40.
- A cinema ticket costing €9 would rise to €9.50.
- A haircut that cost €43 would cost €45.
