Local hotelier blasts government on 'short-sighted' VAT increase
A local hotelier has blasted the government for it's 'short-sightedness' following the Budget announcement that VAT rate for the hospitality sector is to return to 13.5% from 9%. Owner of the Riverside Park Hotel, Colm Neville, said that, ultimately it was the public who would be paying for the decision as the additional 4.5% would have to be reflected in their bills for everything from a hotel stay to a cup of coffee.
The VAT rate for the sector was dropped to 9% in 2012 in an attempt to stimulate the tourism industry in a move overseen by Taoiseach Leo Varadkar who was then Minister for Tourism. In last week's budget this was reversed in a move that Mr Neville believes could have disastrous consequences for the industry. He says that Ireland has now gone from a mid-table position in terms of VAT rate for the hospitality sector to the sixth highest in Europe, making it less attractive to tourists.
'People say that it was a concession to drop it to 9%,' he said. 'But in actual fact, I'd look at it as a correction of something that wasn't right in the first place. I understand the government need to take money in to look after welfare issues and housing needs, but I think this is very short-sighted and they are playing with fire here.'
Mr Neville says that move severely hampers the tourism sector's ability to compete with other cheaper European destinations and said that the timing couldn't be worse, given concerns over Brexit. He says that UK tourists are now at a 30% disadvantage coming to Ireland given the combination of the new VAT and exchange rates.
Having overseen major expansions and renovations at The Riverside Park Hotel in the past couple of years, Mr Neville said that hoteliers would now have to question whether investing in expansions would be prudent given the potential impact.
'This isn't just a way of slapping down big Dublin hoteliers,' he said. 'This will impact every coffee shop and restaurant in the country; people who work very hard to keep their doors open. People will dine out less and drink less coffee because things will get more expensive. There's no way of avoiding that. Hotels, restaurants and coffee shops simply cannot sustain that 4.5% themselves. If they did it would be a serious threat to jobs. It would be a pity to see employment decrease and visitors to this country decrease because of this short-sightedness.'
Mr Neville was also shocked that the Minister for Finance Paschal Donohoe, also himself a former Minister for Tourism, opted to increase the VAT rate by the full 4.5% rather than testing the waters with an increase closer to 2%.
'All of these points were made to Ministers at the top table,' he said. 'I spoke them myself and believed the understood the severity of the situation. That's why this really came out of the blue on budget day. I'm convinced that this really is the wrong decision and it will have a major impact on an industry that has been performing well and is an employer in every single parish in the country.'
Only time will tell the impact that the decision will have.