Hoteliers who abuse 9% VAT rate will pay consequences, says Ross

Hoteliers who are found to abuse the special 9 per cent VAT rate for the hospitality sector will face consequences, Minister for Tourism Shane Ross has said.

Mr Ross praised the decision by Minister for Finance Paschal Donohoe not to revert back to the 13.5 per cent rate amid significant pressure to do so. The reduced VAT rate was introduced to stimulate the hospitality sector in 2011.

However, Mr Ross said he was concerned by “alarming prices” being charged by some hotels, in particular when major events were being held nearby.

He insisted price gouging in this sector will not be tolerated and stated everyone in involved “should be put on notice” that the Government was watching closely.

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Asked what consequences businesses might face, the Minister said none had yet been identified but he insisted they would be progressed over time.

Minister of State at the Department of Transport Brendan Griffin said an increase in the rate would have driven prices up further in the sector.

‘Sins of a few’

The vast majority of hoteliers should not be abused for the “sins of a few”, Mr Griffin insisted.

However, he added: “That said, the sins of a few can actually damage the reputation for everybody concerned. It is a major concern.”

The 9 per cent rate for special tourism-related activities, such as restaurants, hotels, cinemas and other areas, was introduced to encourage growth and employment in the sector. Hospitality industry groups have consistently lobbied for its retention but the Department of Finance argues a return to the 13.5 per cent rate would yield €500 million a year.

However, Fianna Fáil and many Governments TDs said such a proposal would damage the tourism sector at a crucial point given the ongoing uncertainty surrounding Brexit.

Mr Griffin told reporters the department was assessing a series of options to increase the numbers of visitors from Britain, which have fallen by 7 per cent since last year. He said Britain was no longer Ireland’s biggest market but should “not be given up on”.

Meanwhile, Mr Ross confirmed he did not seek any tax breaks or incentives for publicans who assist customers in getting home after drinking alcohol. The initiative was proposed by Mr Griffin as part of plans to automatically ban drivers caught over the legal limit of alcohol.

Rural life

Mr Ross said he is committed to ensuring rural life is preserved and no damage is inflicted on small pubs. Measures that sympathise with that desire will be considered and are being discussed with a large number of stakeholders. However, he added it would not include any tax measures.

In response Mr Griffin said it was vital the small pub was protected and new ideas were required from all. Not all of these would be budgetary, he added.