The real threat to tourism and hospitality
Sir, – Cantillon repeats the “anecdotal evidence” from the tourism and hospitality industry that “business is softening for venues in Dublin city centre due to factors such as a fall in British visitor numbers” and concludes that with “Brexit on the horizon the Government’s timing in reinstating the higher VAT rate was dire, even if its excuse for acting – that tourism was booming – was probably sound (“Hospitality VAT rate spat on the cards”, Business, August 13th).
The Irish Congress of Trade Unions had been to the fore in calling for an end to the “temporary” 9 per cent VAT rate.
We said it was not benefiting customers, which was subsequently confirmed by the Department of Finance Tax Strategy Group.
We said that the alleged impact on job creation was greatly exaggerated. Indecon Economic Consultants, in a report for Fáilte Ireland, later showed one-in-eight new jobs in the five years 2011-2016 were due to the reduction in VAT.
We said the costs to the public purse of this generous subsidy was much greater than the €880 million Government estimated over its planned 2½ year application, which the Revenue Commissioners now put at €3.2 billion over its 2011-2018 extended lifetime.
Brexit is the latest reason put forward by industry lobbyists calling for a return of the lower VAT rate.
While Brexit does have negative implications for tourism, the increase in the number of visitors coming from other countries is compensating for the relative decline in the proportion coming from Britain.
What’s more, 60 per cent of British visitors are return visitors, over 40 per cent are visiting family and friends and one in 20 was born in Ireland. It is by no means conclusive that such visitors are influenced by VAT rates.
The time is ripe for hoteliers and restaurateurs to engage with the system of Joint Labour Committees established by the Oireachtas so as to deliver decent work and fair conditions for their workers, who are three times more likely to subsist on the minimum wage than the average Irish worker. Bad jobs and bad employers are the real threat to businesses in this sector. – Yours, etc,
General Secretary, Irish
Congress of Trade Unions,