Tourism sector must prove lower VAT rate worthy of support
TOURISM Minister Leo Varadkar will push for a continuation of the reduced 9pc VAT rate – which costs the Exchequer about €350m a year in lost revenue – for the tourism sector in the next Budget.
Mr Varadkar has told hoteliers they will need to present clear evidence that the reduced rate is having a strong positive impact on the sector.
The reduced rate was introduced by Finance Minister Michael Noonan and came into effect in July 2011. It is slated to be in place until the end of this year, and is due to revert to 13.5pc on January 1.
It 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.
The hotel sector, in particular, has benefited from the lower rate, but Mr Varadkar has told hoteliers they must be able to demonstrate solid returns from the reduction.
"As you know, the VAT reduction costs the Exchequer €350m a year," he told hoteliers yesterday.
"That's a lot of money. So to help me with that case, what I don't need is special pleading about how the industry is struggling. Every industry is struggling.
"What I need from you is evidence that this policy has worked, and that the number of people employed in the sector is increasing."
While some hoteliers and others in the tourism trade have questioned the value of Failte Ireland's Gathering initiative, Mr Varadkar told hoteliers that they needed to back it.
"What I need is hoteliers to get behind The Gathering and get actively involved in organising, supporting and promoting events," he said.
"I also need you to make sure that visitors' experiences are positive and that we avoid any allegations of over-pricing or bad value.
"If people have a good experience, they are more likely to come back.
"That's the best way to increase revenue."