Unions urge Government to scrap 9% tourism VAT rate

Ictu calls for major local authority house-building programme to be in next budget

Patricia King: she said the reduced rate of VAT enjoyed by the hospitality/tourism sector represented a “de facto subsidy that had already cost the State some €2.2bn  in taxes foregone”

Patricia King: she said the reduced rate of VAT enjoyed by the hospitality/tourism sector represented a “de facto subsidy that had already cost the State some €2.2bn in taxes foregone”

 

Trade unions have urged the Government to abolish the special 9 per cent VAT rate for the hospitality and tourism sectors, and also to establish a €1 billion local authority house-building programme.

In its pre-budget submission the Irish Congress of Trade Unions (Ictu) also called for greater investment in education, health and childcare services to lower living costs.

Congress general secretary Patricia King said the reduced rate of VAT enjoyed by the hospitality/tourism sector represented a “de facto subsidy that had already cost the State some €2.2 billion in taxes foregone”.

“In fact all the evidence suggests that the reduced rate operates as a subsidy to very profitable corporations which is a waste of valuable resources when set against areas of obvious need such as homelessness.”

Congress said on Wednesday that a failure to properly tackle the housing crisis in the forthcoming budget would see Ireland “pay a high price in terms of future social cohesion, damage to future growth prospects and increased living costs for working people”.

Social housing

It urged that local authorities should take the lead in a major house-building programme, with funding of at least €1 billion from Government, aimed at providing at least 10,000 social housing units a year by late 2018.

“We abandoned the housing market to private developers and let profit become the key driver of housing provision. But the market has failed, and Government must now step in and declare a national housing emergency and act accordingly.

“Given that this is an emergency, compulsory purchase orders must be utilised as a matter of urgency to ensure available serviced land is put to good use, while the introduction the vacant site levy should be brought forward from January 2019.

“We cannot afford a return to the developer-led and shaped policies of previous years despite recent attempts from that sector to extract more tax breaks and subsidies in order to build houses. That approach has led us directly into the crisis we see today.”

Childcare infrastructure

Ictu also proposed that the Government should increase the rate of employers’ PRSI to 13.75 per cent on incomes in excess of €100,000. It said such a move would generate about €150 million.

“Targeting employer PRSI contributions on just the portion of salaries above €100,000 will affect relatively few employments [less than 50,000] and would not affect the marginal tax rate on employee salaries. The yield from this measure would boost workers’ ‘social wage’ and should go towards childcare infrastructure.”

Congress also urged the Government to introduce “a small and recurring net wealth tax”.

“The tax should be focussed on those households with net assets in excess of €1 million, and it should aim to collect €275 million in net additional revenue during 2018,” says the pre-budget submission.