Mixed reaction to retaining Vat at 9%

Finance Minister Michael Noonan’s decision to retain the 9% Vat rate in the tourism sector will not create jobs, only safeguard existing employment, an economist has predicted.

In his budget speech, the minister said the lower rate had created 15,000 jobs since its introduction.

Dr Declan Jordan, an economist in the University College Cork School of Economics, said: “The 9% Vat rate, I can’t see how that will create a jobs increase, it could have destroyed jobs [if the rate had been put back up to 13.5%], but all[the] retaining it will do is protect existing jobs.”

However, tourism bodies expressed delight that the tax reduction, which had been tipped to be reversed, was being maintained. They also welcomed the decision to do away with the air tax.

“The retention of the reduced Vat rate provides us with greater certainty into 2014 and will enable us to compete more effectively abroad for holidaymakers,” said Michael Vaughan, the president of the Irish Hotels Federation.

“This will continue to have benefits for increased employment throughout the country, particularly in rural regions.”

Adrian Cummins of the Restaurants Association said 5,000 new positions across the tourism sector could be put in place as a result of the measure.

He said: “Vat at 9% keeps Irish tourism competitive, attracts overseas visitors and, most importantly, encourages people to spend their money in Ireland on Irish goods and services.”

Tourism Minister Leo Varadkar urged businesses to fully utilise the measure “while it remains in place”.