Sunday 21 July 2019

Noonan vows to keep 9pc VAT for hotel and tourism sector

Finance Minister Michael Noonan
Finance Minister Michael Noonan

FINANCE Minister Michael Noonan said he doesn't expect to end the special VAT rate for the hotel sector in October's Budget.

Mr Noonan made the comments to local radio station KCLR 96FM while campaigning in Kilkenny yesterday.

"I have no plans to change the 9pc VAT rate in the next Budget but of course any change would be for subsequent ministers after that," he said before a Kilkenny Chamber of Commerce lunch.

The special VAT rate was meant to be a temporary measure but has proved popular with the sector.

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.

Economist Alan Ahearne told the Irish Hotels Federation conference in February that it has helped create over 30,000 jobs while costing the state a fraction of what was feared in lost tax revenue.

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.

"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.

The number of tourists visiting Ireland is increasing rapidly, according to the latest CSO figures. Visitors rose 14pc in the first three months of the year compared to the same period last year. Visits from mainland Europe rose 17.6pc.

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