Minister warns tourism sector he will only maintain 9pc VAT rate if savings passed to customers
Tourism and Transport Minister Paschal Donohoe today warned hotel and restaurant owners against a return to the days of “rip-off” Ireland - and said he will only support a continuation of the preferential 9 per cent VAT rate for the tourism industry if the benefits are passed on to the consumer.
“We cannot get back to any perception of rip-off Ireland for international or domestic tourists. We got to this point a number of years ago and really big mistakes were made in not offering good value to people.” he said.
Speaking at a review of construction of the 2 km “missing link” to the Dublin Bay Cycle Path between Sutton and Clontarf, Minister Donohoe said he has already outlined criteria to evaluate the merits of retaining the 9 per vat rate for the tourist industry.
“Our hotels, restaurants and cafes got too expensive and it caused gigantic damage to Irish tourism. That mistake cannot be made again. It is a matter I have under continual review and that’s why I am always clear the retention of the 9 per cent VAT rate is conditional on not seeing a return to the behaviour that cause so much damage before.’
He said independent analysis shows that 30,000 jobs have been maintained or created in the industry and that the VAT rate reduction is being used to feed into competitive pricing in hotels.
“We will continue look at the measure in terms of how many jobs it is creating and how it is feeding through to lower pricing for people who go into restaurants and cafes and for domestic and international tourists.’
‘As long as the 9 per cent VAT rate continues to deliver those objectives I will champion for its retention.”
He refused to say if a commitment has been made yet to retain the measure in the October budget.
“That decision will be made in the context of the estimates process after the summer but if it used in the way it has been in the past to allow the creation and retention of 30,000 jobs in tourism it’s a measure I would like to see retained.”
Meanwhile Minister Donohoe ruled out the establishment of an inquiry into motor insurance in a bid to cut the spiralling costs of premiums.
He said the main contribution of government to deal with the challenges of rising premiums is to put in place measures to make our roads as safe as possible, thereby reducing accidents and allowing people get more competitive insurance policies.
The Minister said the government is also looking at the possibility of independent sharing of penalty point information with insurance companies. “ By doing this we will make sure they have the information to accurately and fairly charge people insurance policies that reflect how safe they are on the roads.”
More than €6 million will be spent on the missing link of the Dublin Bay Cycle Trail between Sutton and Clontarf which will form part of the broader East Coast Trail.
Construction of the "missing link" will finish in summer of 2016. The scheme is located within an UNESCO designated Dublin biosphere area.