Tuesday 23 July 2019

Hotels could get lower Vat rate back under hard Brexit

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John Mulligan

John Mulligan

THE Government is willing to reintroduce the 9pc Vat rate for the hotel sector if the tourism industry comes under pressure in the event of a hard Brexit or any other economic hit.

Minister of State for Tourism and Sport Brendan Griffin has told hoteliers that the rate - which controversially reverted to 13.5pc after the last budget - will be kept under review.

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Attendees at a recent hotel investment symposium in Dublin confirmed Mr Griffin's remarks.

They said he was quite explicit in stating that the 9pc rate could make a comeback if the economy came under pressure.

"The Government continues to monitor the overall performance of Irish tourism on an ongoing basis and all options relating to taxation and other factors affecting the industry are always open to consideration," a spokesperson for Mr Griffin told the Irish Independent.

Hotels, restaurants, funfairs, cinemas, hairdressers and newspaper publishers were among those that benefited from the special 9pc Vat rate that was introduced in 2011 during the depths of the financial crisis.

It was credited with creating and sustaining tens of thousands of jobs.

But the Revenue Commissioners said that reverting to the 13.5pc rate would generate as much as €527m a year for the Exchequer. There was a strong campaign by hoteliers and restaurateurs to have the 9pc rate retained. But in the last budget, Finance Minister Paschal Donohoe said that the reduced rate had "done its job".

Tourism Minister Shane Ross was heckled earlier this year at an Irish tourism awards event because of the Vat increase.

Mr Ross said his comments at the event that the sector could cope with the rise resulted in a "buzz of barracking from the big hotel price-gouging brigade at the dinner".

The increase in the Vat rate to 13.5pc is likely to have a more significant impact on small hotel operators and those in rural areas. Pat McCann, the chief executive of Ireland's biggest hotel group, stock market-listed Dalata, said in May that the Vat increase had been a "non-event" for the company. However, he agreed that rural hotels were most likely to feel the pinch from the rise.

A survey last month from Irishjobs.ie found that vacancies in the hotel and catering sectors rose 13pc quarter-on-quarter in the first three months of the year, and by 9pc year-on-year.

Figures this month from the Central Statistics Office show that the number of overseas visitors to Ireland rose 6pc in the first quarter of the year.

Irish Independent

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