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Thursday, 03 January 2019

Irish tourism bodies call for review into VAT raise

Following the rise on the rate of VAT from 9% to 13.5% on the hospitality sector coming into effect on New Year’s Day, representatives from the Irish tourism and hospitality industry have called for a review into the policy. The rate was initially cut to 9% in 2011 to help create jobs following the recession, and the Irish Government took the decision to restore the rate to 13.5% in the 2019 Budget. This comes off the back of a strong year for Irish tourism, with Ireland earning an estimated €6.9 billion from overseas tourism in 2018 and 25,000 new tourism jobs created. The reduced rate has been hailed as vital for growth of the hospitality industry and for the recovery of Ireland’s economy as a whole.

The effects of the tax hike have already been seen, with a raise in the cost of coffee being passed onto consumers; the price of a cup of coffee at Dublin-based chain 3FE rose 4% from €3.50 to €3.65, while at Insomnia a 12-ounce Americano rose 10 cent to €2.80. Adrian Cummins, CEO of the Restaurants Association of Ireland, has called for a review into the tax rise, saying he believes there will be lots of closures in regional and rural Ireland, with the now-third highest VAT rate in Europe making them less and less competitive.

Furthermore, one of the main tourism bodies in Ireland, the Irish Tourism Industry Confederation (ITIC), stated that maintaining recent success in terms of overseas visitors and revenue would not be easy. Eoghan O’Mara Walsh, the Confederation’s Chief Executive, also called for a review into the tax raise, claiming “The decision by the Government to increase tourism VAT rate by 50 per cent on January 1st imposes a €466 million tax on the sector next year. This is at the worst possible time with Brexit looming and tourism’s competitiveness diminished and ITIC repeats its call for this VAT hike to be deferred.” The ITIC’s Chairman, Maurice Pratt, has called on the government to do more to support tourism and match the industry’s ambition for the sector.

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