Retention of reduced VAT rate vital to maintain record tourist numbers
Success of Gathering initiative 'outweighs cost to Exchequer'
JUNIOR Tourism Minister Michael Ring is urging Finance Minister Michael Noonan to retain the reduced 9pc VAT rate for the tourism sector in a bid to build on the success of this year's The Gathering initiative.
It comes as new figures show tourism numbers are the best that they have been for four years with the strongest result from North America, where the tourism initiative aimed at attracting people to Ireland has been heavily promoted.
The reduced VAT rate costs the exchequer €350m a year and was introduced by Mr Noonan in July 2011. It is due to remain in place until the end of this year, and could then revert to 13.5pc on January 1.
Mr Ring told the Irish Independent that now would be the wrong time to reverse the 9pc reduced rate.
"I'm confident that he will look at it very carefully. He himself has got a lot of plaudits out of it," Mr Ring said.
"It's costing the Exchequer €350m a year, but we're gaining it back in jobs, we're gaining it back in visitor numbers, we're gaining it back in tax returns.
"I've said this to him (Mr Noonan), it would be the wrong time to go changing it now."
The rate applies to certain goods and services that were previously liable for a 13.5pc rate, including restaurant and catering services, hotel and holiday accommodation, and admission to cinemas, theatres, museums, galleries and fairgrounds. It also applies to hairdressers and newspapers.
Restaurant owners have also been urging the Government to maintain the rate.
The Irish Hotels Federation (IHF) has said that despite an increase of 8.1pc in overseas visitors between April and June, many hotels in rural areas continue to suffer from struggling domestic demand.
IHF president Michael Vaughan said: "The Government's decision to reduce tourism VAT to 9pc has provided a vital stimulus for hotels and guesthouses and acted as a key competitive advantage when marketing Ireland as a tourism destination abroad.
"It's now of the utmost importance that the Government provides greater certainty around the retention of the tourism VAT rate into 2014 to support struggling domestic demand," he said.
More than 2,000 events around the Gathering were expected to take place this summer.
Figures from the Central Statistics Office show that one million American visitors are expected to visit Ireland in 2013, spending around $1bn (€765,000).
Overall visitor numbers to Ireland have risen 8.1pc, to 1.77 million, from March to May.
There was a 12.8pc increase in North American tourists over the first five months of the year, with 369,100 visits.
UK visitors were up 5.6pc to 726,300 – despite the overall slump in the general British travel market.
Mr Ring said the challenge is building on the success of the Gathering and ensuring visitor numbers are maintained.
"If they (tourists) go away with a sour taste in their mouth, it will do us more damage than good," Mr Ring said.
"That's why we need to make sure that we give them value for money, we give them a respect that they deserve and that they enjoy their stay in Ireland."
The Government has also unveiled a new initiative aimed at marketing the west coast of Ireland as a driving route in the same way as the Pacific Coast is marketed in the US, or the Amalfi Coast in Italy.
The Wild Atlantic Way will include special viewing points and signposts for beauty spots that may be off the beaten track.