9% VAT for tourism and services sector retained

Cork based Fine Gael Senator, Tim Lombard, has been advocating the need to maintain the 9% VAT rate for the tourism and services sector and is delighted that Budget 2018 has confirmed its retention.

After today’s announcement Senator Lombard said: “I am pleased that the significance of maintaining the special 9% VAT rate for our hospitality sector has been recognised in Budget 2018.

“55,188 jobs have been created in Ireland as a result of the 2011 reduction of tourism and services VAT; 37,800 directly in the restaurant and tourism industry and a further 17,388 related jobs elsewhere in the economy.

“This increase in employment has resulted in savings to the exchequer of an estimated €756 million from the Social Welfare bill. Additionally, the restaurant sector contributes at least €4 billion to the Irish economy each year.

“These are only a few examples of the economic benefits associated to a lower hospitality VAT rate. While an increase would result in a direct increase of revenue, the knock-on effect and wider implications would be extensively disadvantageous to the Irish economy.

Speaking about the VAT rate during today’s Budget 2018 announcement, Minister for Finance, Paschal Donohoe, said: “While I note that prices in Dublin continue to rise, I have said before that VAT policy cannot be decided on the basis of one location only but in the context of the national interest. Accordingly, I have decided not to change the VAT rate on the tourism and services sector.”

Senator Lombard agreed, adding: “This is incredibly important for tourism in rural Ireland in particular as they do not receive the same influx of people as our urban centers, thus there is a need to ensure affordability to attract patrons and secure return business.

“Given the uncertainty surrounding the economic impact of Brexit and the increasing costs of doing business in Ireland, retention of the 9% VAT allows our hospitality industry to remain competitive.”

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