VAT hike would be 'detrimental' to rural hotels
The Government has been urged to consider the "detrimental" impact a Vat hike would have on rural Ireland's hospitality sector before taking any steps to scrap the lower rate that currently applies.
Taoiseach Enda Kenny and Tourism Minister Shane Ross got a letter from a businessman in the sector warning against "the surrender of a very positive initiative". Vat was reduced for hotels from 13.5pc to 9pc as a temporary measure to boost tourism back in 2011. The letter raising concern about a reversal of the policy came after Finance Minister Michael Noonan was given a briefing by officials saying the reduced rate has "done it's job" and that returning it to 13.5pc could raise €640m.
The businessman's name was redacted in the freedom of information release as it was deemed to be "commercially sensitive material".
In the letter, he asked: "What would be the financial impact on business in general and rural Ireland in particular [of a Vat rate increase]. Is that a consideration?"
The businessman said the 9pc Vat rate was a "key factor in helping us to retain our business" and that proposals to scrap the lower rate would be "detrimental" to the industry "across the entire country".
Last October, Mr Noonan singled out Dublin hotel prices, warning the case for retaining the Vat rate was "diminishing each year with room rates rising, particularly during major events".
The programme for government states that the 9pc rate will be retained on the condition that "prices remain competitive".
Mr Ross previously said that he supports the retention of the lower rate. His spokesman said that the department has yet to make its Budget submission to Mr Noonan.