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Calls for tourism sector VAT to be cut to zero for best chance of recovery

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A slashing of the VAT rate for the tourism sector is on the cards if Fianna Fáil and Fine Gael form a government amid the devastating effect of the coronavirus crisis on Ireland's largest indigenous industry.

Senior figures in both parties want to see the rate cut, with several TDs suggesting it should even be at zero.

Others expressed doubts that it could be reduced to zero, but did leave open the possibility of some VAT relief for the industry.

It comes as the Green Party last night finalised its preparations for entering government formation talks with the two bigger parties today.

With the tourism industry on its knees due to the coronavirus restrictions and amid the expected collapse in international travel, Fine Gael junior minister Brendan Griffin last night laid out the stark challenges facing the sector.

He said the impact of the Covid-19 crisis is greater than the disruption caused by 9/11, Sars, volcanic ash and foot and mouth disease combined.

Mr Griffin told the Dáil it is estimated that more than 200,000 jobs have been lost in tourism and it is expected that it will take years to recover.

He said there have been calls in the industry for the reduction of VAT rates for tourism.

The Kerry TD said he will be seeking a reduction, adding: "It's something that I am very passionate about and I believe is very much needed in the recovery phase."

The VAT rate currently stands at 13.5pc.

It was reduced to 9pc to support the industry after the last recession, but was increased back to 13.5pc by Finance Minister Paschal Donohoe in Budget 2019.

A string of Fianna Fáil TDs, including deputy leader Dara Calleary and tourism spokesman Marc MacSharry, yesterday said the rate should be set at 0pc.

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Mr Calleary said the reduction of VAT to zero "has to happen", warning many businesses won't have the capacity to reopen without support.

Mr MacSharry told the minister "you must look at zero percent VAT", which he argued would allow Irish tourism a competitive advantage over other countries.

Their party colleague Christopher O'Sullivan said tourism businesses need a stimulus and "money in their pockets" so they could pay staff and keep businesses afloat.

He also asked if the Government would consider a 0pc VAT rate, as did Fine Gael TD Frank Feighan. He said industry bodies have been seeking the reduction until the damage caused by Covid-19 has been rectified.

In response to Mr Feighan, Mr Griffin agreed that, while it is a matter for the Department of Finance, he supports a 0pc VAT rate.


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