Boost for tourism as VAT cut to be extended
TOURISM companies were jubilant last night following government confirmation that the lower VAT rate for restaurant meals and hotel visits is to stay -- for now.
Transport and Tourism Minister Leo Varadkar said the 9pc VAT rate for tourism services would remain in place until the end of 2013.
The announcement followed discussions with Finance Minister Michael Noonan.
More than 6,300 extra people were working in accommodation and food services since the rate was cut from 13.5pc to 9pc last July, Mr Varadkar said.
"Initial indications suggest that the policy has worked well and there has been an increase in employment in the sector with prices charged to consumers falling as well," he said.
Although foreign visitor numbers dipped in the first three months of the year, they had grown 6pc in 2011 and advance bookings and inquiries for coming months were also up on this time last year.
Marketing body Tourism Ireland said the move would help sell Ireland as a better value destination, as evidenced by a recent Hotels.com survey finding that Dublin had the cheapest hotel prices in Europe.
"Value for money is a key message in our advertising and promotions around the globe and the announcement today by Minister Varadkar that the special 9pc VAT rate for tourism and hospitality services will be maintained until the end of 2013 is good news indeed," said Tourism Ireland chief executive Niall Gibbons.
The Irish Hotels Federation (IHF) said that prolonging the 9pc VAT rate allowed international tour operators to plan their 2013 trips to Ireland with greater clarity.
IHF President Michael Vaughan said it gave tourist businesses a key competitive advantage, particularly in the run-up to the Gathering 2013.
The Gathering will be Ireland's biggest ever tourism initiative, when people of Irish descent are being urged to visit the country for a series of special local events.
The next 18 months would be an important showcase for Ireland, with events like the Heineken Cup final and The Gathering, said the Restaurants Association of Ireland.
Meanwhile, IBEC's Retail Ireland division called for a VAT cut to be extended to the struggling retail sector as it had been hit hard by the top rate VAT hike to 23pc.