Business tourism VAT may be cut

VAT on business tourism may be reduced in the December budget, Minister for Tourism John O'Donoghue has indicated.

The Minister, who also told the Dáil that tourist numbers to Ireland could hit the seven million mark this year for the first time, said that while it was "not possible to discuss what will be in the budget", he had been in talks with the Minister for Finance and "he has been examining whether it would be possible to do something about VAT for business tourists". VAT on conference business and overnight stays "puts us at a disadvantage in comparison with some of our competitors", he said.

He was responding to Fine Gael's Jimmy Deenihan, who criticised the levels of VAT and called for a business VAT refund.

Mr O'Donoghue also believed that "this year will be the best year for tourism since the foundation of the State". Ireland "will never be a low-cost mass destination. It never was. Our product is for a more discerning, sophisticated customer and that has been the tradition." But he believed the "competitiveness issue" was very important and had to be watched carefully. However, he rejected Mr Deenihan's claims of a decline in tourism. "The deputy presents an unduly dismal picture of tourism performance in recent years". The Minister pointed out that in 1996, 4.7 million people visited Ireland and spent €1.79 billion compared to almost seven million tourists last year, "who generated foreign earnings of more than €3.4 billion".

The American market had recovered since the September 11th attacks and there was "clear evidence of strong growth this year. Other European countries have not been as fortunate." Mr Deenihan said the west was not benefiting and pointed to a drop in golfing holidays to Ireland from 306,000 in 2000 to 138,000 in 2004.

Mr O'Donoghue said "there is no denying that tourism is a good news story" and that while there was a difficulty in western regions, "a rejuvenated, integrated marketing approach" had led to a reversal in the downward trend.