Tourism VAT cut created '21,600 hospitality jobs'

Report claims exchequer made €433m in social welfare savings from rate

The VAT rate for tourism-related services was reduced from 13.5 per cent to 9 per cent in July 2011. Photograph: Joe St Leger

The VAT rate for tourism-related services was reduced from 13.5 per cent to 9 per cent in July 2011. Photograph: Joe St Leger

Mon, Aug 25, 2014, 10:31

More than 21,600 direct jobs have been created in the food and accommodation sector since VAT was reduced to 9 per cent for tourism-related services, according to a report to be published today by the Restaurants Association of Ireland.

The VAT rate was reduced from 13.5 per cent in July 2011, and the measure has been “a major success”, according to Adrian Cummins, chief executive of the association.

Using national employment data from the Central Statistics Office, the report found that 21,633 jobs were created in the food and accommodation sector, and a further 9,951 indirect jobs were created elsewhere in the economy.

Social welfare

It also points to social welfare savings, noting that for every 10,000 people off the live register, the exchequer gets a net gain of €200 million.

Mr Cummins said the exchequer had made “a remarkable €433 million in social welfare savings” as a result of the 21,633 jobs created.

“The new jobs created as a result of the reduced VAT rate has also meant additional revenue for the Exchequer from the increase in payroll tax receipts.” He said the contribution from employee and employer taxes from the direct jobs created delivered an additional €103 million to the exchequer.

According to the CSO figures, overseas visits to Ireland grew by 10.3 per cent in the period from January to June 2014 compared to the same period in 2013.