This is not the time to impose greater tax burdens on the hospitality industry
Opinion: Sector offers talented young people an alternative to emigration
Sometimes it takes an outside perspective to appreciate that progress has been made. Challenges of Himalayan proportions remain. But there is some growth. Employment is increasing, however slowly. We are, at least technically, out of recession.
It is possible to have a degree of sympathy for Ministers who are in the third year of struggle. Even after the summer recess the strain is there on their faces as the serious budget haggling gets under way. Some are visibly ageing – and not all of them were in the first flush of youth when this administration was formed. These are challenging times to be in government.
There are periods, I suspect, when Ministers are so beleaguered that they cannot think straight. They are on informational overload, reliant on summaries and abstracts prepared by civil servants and likely at any time to fall victim to the laws of unintended consequences. Sometimes, perhaps, they even lose sight of some of the things that they have achieved.
One would like to think that something of this miasmic condition lies behind Minister for Finance Michael Noonan’s announcement that he is considering the reintroduction of the 13.5 per cent VAT rate for the hospitality industry which he reduced to 9 per cent in 2011. He needs €316 million, he told a Limerick conference. If he cannot get it from the hospitality sector, he said, he will have to get it from somewhere else.
When he reduced VAT for hotels and restaurants Noonan was following the lead of his French counterpart. As the French economy contracted in 2008-2009 the restaurant and cafe sectors came under pressure. Contrary to national habit, the French decided to eat and drink at home, eschewing the cafes and bars. Tens of thousands of waiters, barmen, chefs and kitchen workers were let go as business dwindled.
Tourism figures rise
But when the Sarkozy government cut the tax rates for the sector from 19.6 per cent to 5.5 per cent, they started going out again. Not only that, but tourism figures also started to rise as word got about that France was not as expensive as it used to be.
Noonan makes the point that when he announced the drop in VAT in 2011 it was, in effect, a unilateral decision. There had been no recent lobbying on the issue. He is entitled to credit for that. He saw a good idea working elsewhere and applied it here.
The restaurant owners’ association says that it enabled its members to create 9,000 jobs. Hoteliers all over the State will acknowledge that it allowed them to reduce prices, offering better value to the domestic market and to foreign tourists. The result is that tourism figures are up. Hotels, especially at the upper end of the market, are doing more business. Foreign capital is now actively seeking investment opportunities in Irish hotels.