Retention of 9 per cent tourism VAT rate in Budget welcomed

Retention of the special 9 per cent tourism VAT rate has been welcomed by the restaurants and hotels sectors, who described it as vital to sustaining jobs.

The Irish Hotels Federation in particular said the measure was "one of the most successful job creation initiatives in modern times" having supported the creation of more than 33,000 new jobs since it was introduced in 2011.

According to the federation’s president Stephen McNally, retention of the measure alongside other pro-tourism initiatives will lead to a further 40,000 jobs by the end of the decade.

Mr McNally said the 9 per cent VAT rate was “of enormous importance to the industry”, helping to level the playing field for tourism businesses when competing with international destinations for visitors.

Tourism as now supports some 200,000 jobs – equivalent to one in every nine jobs in the country – representing some 54,000 jobs in 812 hotels and 235 guesthouses. Total revenue generated across all tourism-related businesses annually stands at approximately €6 billion and accounts for 4 per cent of GNP.

Mr McNally said the federation’s own research showed 98 per cent of hotels and guesthouses found the VAT rate had a positive impact on their business.

The Restaurants Association of Ireland also welcomed the retention of the special rate, as well as the lack of increases in excise duties.

The association said 34,052 new jobs have been created since the rate was introduced in 2011, resulting in savings to the exchequer of €699.72 million in the past three years, largely in social welfare payments.

However, Adrian Cummins, the association’s chief executive, said while the move was positive, the decision not to reverse excise on alcohol was “a missed opportunity” to create further jobs and increase overseas tourism.

“The high cost of alcohol when dining out is one of the main reasons tourists will not return to Ireland,” he said, calling on the Government to reverse excise on alcohol in next year’s budget.

The association also said chef training should be given “the utmost priority”.