Business Irish

Sunday 24 September 2017

'Lower VAT rate helped create over 30,000 jobs' - economist Alan Ahearne

FILE PICS: Dr Alan Ahearne Photo: Leon Farrell Photocall Ireland.
FILE PICS: Dr Alan Ahearne Photo: Leon Farrell Photocall Ireland.
Aideen Sheehan

Aideen Sheehan

THE 9pc tourism VAT rate has helped create over 30,000 jobs while costing the state a fraction of what was feared in lost tax revenue, it was claimed today.

Economist Alan Ahearne told the Irish Hotels Federation conference in Cavan that the reduced VAT rate had been passed on to consumers and exceeded expectations in revitalising the tourism sector.

Many hotels had reduced staff to skeleton levels following the economic crash but the lower VAT rate allowed them take on new staff and invest in refurbishment, Mr Ahearne said.

The lower VAT take had cost the Exchequer €107m in the first year after it was introduced in 2011, but this had been far less than the expected loss of €350m, he said.

When increases in tourism spending and employment are factored in, the cost to the state were probably considerably less.

"By bringing our tourism VAT rate more in line with our European competitors, the measure has enabled the tourism industry to become more competitive, thereby contributing to increased tourism demand and significant growth in employment in the sector'" he said.

Tourist number are projected to grow and domestic spend by consumers is also recovering meaning there's huge potential for further jobs growth in tourism.

Hotel occupancy rates in Dublin have now reached 78pc which in Europe is behind only Paris and London, said Sarah Duignan of STR Global consultancy firm.

The average hotel room in Dublin cost €96 a night in 2014 which compares to €255 in Paris and €176 in London, she said.

This varied from €111 in Dublin citycentre to €73 in more outlying areas of the capital.

Rates in Dublin dropped by over 33pc at the height of the recession.

IHF chief executive Tim Fenn said that the tourism sector now supported 205,000 jobs which was one in every 10 jobs in the country.

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