Budget 2017: Unions and employers at odds over retention of lower tourism tax rate

The Irish Congress of Trade Unions has claimed the “major flaw” in the budget was the decision to forgo €620m in taxes through the continued 9% Vat subsidy to the tourism and hospitality sector.

Budget 2017: Unions and employers at odds over retention of lower tourism tax rate

“That money could have built 3,000 affordable homes for people,” said ICTU general secretary Patricia King.

“Despite high profits, the sector continues to have the highest number of minimum- wage workers in the economy and the employers refuse to engage with the Joint Labour Committee.”

In his budget speech, Finance Minister Michael Noonan defended his decision to maintain the 9% rate.

He said: “The tourism and hospitality industry has recovered well and is now performing strongly — due in no small way to the reduced Vat rate I introduced during our last term in office.

“Though the economic rationale for maintaining this reduced rate may not be as strong today, I consider it would be prudent to retain the reduced rate in this year’s budget. This will act as a buffer for the sector against the weakness in sterling which increases the cost of holidaying in Ireland for British tourists.”

Fáilte Ireland’s CEO Shaun Quinn agreed: “Given the current uncertainty surrounding Brexit and corresponding volatility in the sterling/euro exchange rate, the retention of the reduced Vat rate provides a certain amount of stability and support for tourism businesses as they seek to navigate choppy waters during the year ahead.”

Paul Gallagher, chairman of the Irish Tourist Industry Confederation, said 17 of the 19 eurozone countries have tourism Vat rates of 10% or less “so the tourism Vat rate in Ireland is right-sized and competitive at the moment”.

He added: “Tourism employs 230,000 people throughout the country and its future growth is predicated on a competitive industry and appropriate government policies.”

The Restaurants Association of Ireland said the low Vat rate is imperative for sustaining and growing the sector. “The association is pleased to see no increase in excise duty for a second year in a row, however, excise duty in Ireland is still the highest in Europe with consumers paying 64% tax on a bottle of wine,” it said. “A reduction of excise duty would be a move that is pro-jobs, pro-business and pro-tourism.”

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