Tourism businesses 'must cut price'

Businesses catering to tourists must slash prices in line with the cut in VAT, Taoiseach Enda Kenny has warned.

The Government is reducing the rate from 13.5% to 9% for tourism-related goods and services from tomorrow, and Mr Kenny said he hopes businesses will treat visitors as VIPs and pass on the savings.

The Irish Hotels Federation (IHF) claimed the sector was behind the reduction which it claimed would help provide better value to tourists.

Mr Kenny said: “Our words on behalf of the Government ... are that the industry had better understand that this is a situation where they must pass these reductions on to the customer.”

The 4.5% VAT rate cut was unveiled in May as part of the Government’s jobs initiative to boost business and employment.

The IHF, which represents 1,000 hotel and guesthouses with over 54,000 employees, said the rate cut will improve cost competitiveness and help tourism businesses provide better value to visitors.

Tim Fenn, IHF chief executive, said: “It is very important that all businesses within the tourism sector pass on the reduction in VAT to customers and make it very transparent that they are doing so.

“We believe the initiative will provide a much needed boost in trade with knock on effects in terms of job creation within the tourism industry.”