No stay of execution for tourism industry on VAT hike

Cantillon: Government won’t delay rise, because it would have to rewrite entire budget

The Irish Tourism Industry Confederation has written to Minister for Tourism Shane Ross asking for the introduction of the new 13.5 per cent VAT rate to be delayed by a year. Photograph: Leah Farrell/RollingNews.ie

The Irish Tourism Industry Confederation has written to Minister for Tourism Shane Ross asking for the introduction of the new 13.5 per cent VAT rate to be delayed by a year. Photograph: Leah Farrell/RollingNews.ie

 

After several years of winning annual budget battles, the tourism industry finally lost the war over its 9 per cent VAT rate, which was hiked to 13.5 per cent in Budget 2019.

The sector’s lobbyists, however, are making one last pitch to try to delay the rise, which is due to come into force in one fell swoop in January.

The Irish Tourism Industry Confederation (Itic), the umbrella body for all the sector-related groups, has written to Shane Ross, the Minister for Transport and Tourism, asking for the introduction of the new rate to be delayed by a year.

“I am formally requesting you to defer the VAT increase by 12 months. This will allow for the outcome of Brexit to become clearer and, crucially, will also give time for tourism businesses, many of whom have already contracted business next year, to make necessary adjustments,” wrote Eoghan O’Mara Walsh, Itic’s chief executive.

The sector might be better off accepting defeat, and keeping its lobbying powder dry for other issues

From the perspective of the tourism industry, the request may appear reasonable. It will be difficult for the Government to accede, however.

The VAT increase has been pencilled in to raise an extra €466 million for the State next year and is the single biggest revenue-raiser in Budget 2019. To delay it by a year would require a virtual rewrite of the entire budget, given that the money has already been allocated to tackle problems across a range of issues, such as housing and health.

The Government may feel it has weathered the storm that greeted the announcement on budget day and, politically, there is nothing to be gained from reopening the arithmetic now that it has blown over.

Instead of asking for a delay, the sector might be better off accepting defeat, and keeping its lobbying powder dry for other issues.

Most pressingly, in coming years, the industry must convince ministers to increase the paltry allocation for new tourism attractions over the next decade of the National Development Plan.

The tourism industry will feel that the Government owes it one.

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