The lower VAT rate for tourism in Ireland has turned out to be a “significant dead weight” on the economy and growing it now will not harm tourism, as per the Department of Finance.
Yesterday, it published a review of the 9% VAT rate, as part of its preparations for the Budget.
In 2011, the rate was cut from 13.5% to help boost up the sector and to keep people in work.
Patricia King, the General Secretary of the Irish Congress of Trade Unions explained that there is no case to continue upholding the 9% VAT rate for the tourism industry.
While speaking on RTÉ’s Morning Ireland, Ms King stated that Ireland had moved on significantly from the conditions under which the rate had been cut initially.
Ms King said that there was pretty low growth in economy and that the employment rate had dropped.
She stated that hotel prices had increased over twice the rate of all other services and emphasized that they were 20% higher than their EU equivalent, adding that profits were high significantly.
In relation to Ireland having to contend with overseas markets for tourists, she said the UK had a VAT rate of 20%, as the average across the EU is 15%.
Chief Executive of the Irish Hotels Federation Tim Fenn said the department’s report needs balance.
Also while speaking on Morning Ireland, Mr Fenn mentioned that the report looked at household spending patterns in Ireland but does not consider the fact that 80% of the revenue comes from overseas.
Tags: Ireland’s lower VAT
