The Government has been urged to replace a poorly received tourism tax break with “consumer friendly” vouchers.
The Irish Tourism Industry Confederation outlined yesterday just how badly hit the domestic tourism sector has been hit by the Covid-19 crisis and the steps needed for a recovery in the months ahead.
Among its proposals is the immediate replacement of the stay-and-spend scheme, which was introduced in October in an attempt to boost hotels, bars and restaurants by offering tax relief on money spent on tourism. It encouraged people to spend money across the hospitality sector with a promise of receiving 20 per cent of what they spent between October and April back in the form of income-tax credits.
Repeated lockdowns and the comparative complexity of the scheme, as well as delays of up to a year in getting money back, meant few people have availed of it. It was initially expected to cost the exchequer about €270 million, based on spending, by more than two million consumers, of about €1 billion.
Revenue figures show only €6.8 million in spending had been claimed on by the middle of January, with 43,196 receipts uploaded to the Revenue’s receipts tracker. This would suggest a total potential cost to the Department of Finance of just under €1.4 million. But Revenue says just 4,441 claims were made by January 18th, with a total spend of €1.5 million, meaning the scheme has cost the exchequer little more than €300,000.
The tourism confederation said stay-and-spend would have to be redesigned as a consumer-friendly upfront-voucher scheme to stimulate home holidays.
An online seminar it hosted yesterday heard that Irish tourism and hospitality have been disproportionately affected by the coronavirus pandemic, with an estimated 90 per cent drop in revenue and 160,000 job losses.
The confederation said that, with the news of the vaccine roll-out, and the last-minute Brexit deal between the UK and the EU, “hopes rose that 2021 would see a recovery and revival of Ireland’s largest indigenous industry and biggest regional employer”. But the third wave of Covid-19 infections and the subsequent lockdown have meant “that the first few months of the year for businesses are as fraught as ever, with demand nonexistent and businesses relying on State support for survival”. It added that tourism was not expected until at least the third quarter of 2021, with existing Government financial measures required “for far longer than could have been anticipated”.
The organisation's proposals include an enhanced Covid-restrictions support scheme for the tourism sector, bigger business-continuity grants, the extension of the employment wage-subsidy scheme and a waiver on local-authority rates for the whole of 2021.
It also wants the Government to appoint a dedicated minister for tourism, the extension of the 9 per cent VAT rate until 2025, a doubling of tourism agencies' budgets, a global campaign on St Patrick's Day, led by the Taoiseach, to maintain awareness of Ireland around the world, a digital strategy to support the rebuilding of tourism infrastructure, and an analytical transformation of tourism data.