Dump hotel ‘bed tax’ plan, industry representatives urge

Dublin City Council mulls plans for 2% tax on hotel stays in city to be paid directly to it

Dublin City Council is considering plans for a 2 per cent tax on hotel stays in Dublin, similar to taxes applied in other European and some US cities, that would be paid directly to the council - not central government.  File photograph: Eric Luke/The Irish Times

Dublin City Council is considering plans for a 2 per cent tax on hotel stays in Dublin, similar to taxes applied in other European and some US cities, that would be paid directly to the council - not central government. File photograph: Eric Luke/The Irish Times

 

Hoteliers and tourism representatives have urged Dublin City Council not to pursue plans to introduce a hotel “bed tax” in the city.

The council is considering plans for a 2 per cent tax on hotel stays in the city, similar to taxes applied in other European and some US cities, that would be paid directly to the council - not central government.

The Irish Hotels Federation and the Irish Tourist Industry Confederation said the move would jeopardise jobs, damage the tourism sector, stop investment in new hotels and “apply upward pressure” on hotel prices.

In a briefing document presented to the council, the hotel and tourism organisations said there was a significant lack of hotel capacity in the city, and this was holding back both Dublin’s tourism potential and its ability to attract international events.

There were just 105 hotels in the city, which already paid commercial rates of €15.1 million to the council. No new hotels had been built for several years with the result that there was now a requirement for between 3,000 and 5,000 more hotel bedrooms in the city to meet demand, the document said.

“The costs of construction and operating hotels are significant and considerably more expensive than commercial property or residential construction. The introduction of an additional tax risks deterring badly needed investment.”

Increasing pressure

The industry was under increasing pressure from rising labour and utility costs, and the introduction of the tax would increase costs at a time when it was “vital” to maintain competitiveness and offer value for money.

“The competitiveness of the industry remains vital, and a bed tax on hotel accommodation is likely to deter new investment and increase prices - thereby damaging prospects for jobs in the city.”

Labour councillor Mary Freehill said that at 2 per cent the tax would be very modest, even taking into account the “very high rates” charged by Dublin hoteliers.

“The motivation behind the tax is to have a budget to improve the attractiveness of Dublin... We’re talking about a very, very small amount of money here.”

Independent councillor Nial Ring said the Government would not allow the council to retain the funds.

“It would be naive to think the Government would allow us to keep the money. We raise a million, two million, on this and they’ll reduce our grants by the same amount. I don’t think we should be doing the Government’s dirty work.”

Proposals for the tax are being considered by the council’s finance committee, but according to the council’s legal advisers, the tax would require the sanction of the Department of the Environment.